Political–economic equilibrium when parties represent constituents: The unidimensional case |
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Authors: | John E Roemer |
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Institution: | (1) Department of Economics, University of California, Davis, CA 95616, USA, US |
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Abstract: | A political–economic environment is studied in which two parties, representing different constituencies of citizens, compete
over a proportional tax rate to be levied on private endowments, to finance a public good. Although parties know the distribution
of citizen traits (preferences and endowments), they are uncertain about the distribution of traits among the citizens who
will turn up at the polls. This uncertainty engenders an endogenously derived function π(t
1, t
2) giving the probability that any one tax policy t
1 will defeat another t
2 in the election. Equilibrium existence theorems are proved, and the nature of equilibrium is compared with the equilibrium
that exists when Downsian parties (ones whose objective is to maximize the probability of victory) face uncertainty. Both
constituency-representing parties and uncertainty are needed to generate equilibria in which parties propose different policies.
Received: 4 April 1995/Accepted: 2 April 1996 |
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Keywords: | |
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