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Efficiency, Welfare, and Political Competition

Author

Listed:
  • Felix Bierbrauer
  • Pierre C. Boyer
Abstract
We study political competition in an environment in which voters have private information about their preferences. Our framework covers models of income taxation, public-goods provision or publicly provided private goods. Politicians are vote-share-maximizers. They can propose any policy that is resource-feasible and incentive-compatible. They can also offer special favors to subsets of the electorate. We prove two main results. First, in a symmetric equilibrium, policies are surplus-maximizing and hence first-best Pareto-efficient. Second, there is a surplus-maximizing policy that wins a majority against any welfare-maximizing policy. Thus, in our model, policies that trade off equity and efficiency considerations are politically infeasible.

Suggested Citation

  • Felix Bierbrauer & Pierre C. Boyer, 2014. "Efficiency, Welfare, and Political Competition," CESifo Working Paper Series 4814, CESifo.
    • Handle: RePEc:ces:ceswps:_4814
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    6. Bowen, T. Renee & Chen, Ying & Eraslan, Hülya & Zápal, Jan, 2017. "Efficiency of flexible budgetary institutions," Journal of Economic Theory, Elsevier, vol. 167(C), pages 148-176.
    7. Marcus Berliant & Pierre C. Boyer, 2024. "Politics and income taxes: Progress and progressivity," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(4), August.
    8. Sala, Hector, 2019. "A fresh look at fiscal redistribution and inequality in the US across electoral cycles," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 81(C), pages 195-206.
    9. Chatterjee, Somdeep & Mookerjee, Mehreen & Ojha, Manini & Roy, Sanket, 2023. "Does increased credibility of elections lead to higher political competition? Evidence from India," European Journal of Political Economy, Elsevier, vol. 77(C).
    10. Boyer, Pierre C. & Koriyama, Yukio & Schulte, Elisabeth, 2016. "Legitimacy of mechanisms for public good provision," Economics Letters, Elsevier, vol. 146(C), pages 120-122.
    11. Eguia, Jon X. & Nicolo, Antonio, 2019. "Information and targeted spending," Theoretical Economics, Econometric Society, vol. 14(2), May.
    12. Darong Dai, 2020. "Voting over selfishly optimal tax schedules: Can Pigouvian tax redistribute income?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1660-1686, September.
    13. Khan, M. Ali & Qiao, Lei & Rath, Kali P. & Sun, Yeneng, 2020. "Modeling large societies: Why countable additivity is necessary," Journal of Economic Theory, Elsevier, vol. 189(C).
    14. Darong Dai & Guoqiang Tian, 2023. "Voting over selfishly optimal income tax schedules with tax-driven migrations," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(1), pages 183-235, January.
    15. Francisco Silva, 2023. "Should a benevolent government provide public goods if it cannot commit?," Economic Inquiry, Western Economic Association International, vol. 61(3), pages 720-737, July.
    16. David Madden & Michael Savage, 2020. "Which households matter most? Capturing equity considerations in tax reform via generalised social marginal welfare weights," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 153-193, February.
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    More about this item

    Keywords

    political competition; asymmetric information; public goods; non-linear income taxation; redistributive politics;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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