财政学第六章答案

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Chapter 6 – Political Economy

Brief Outline

1. Direct democracy

a. Unanimity Rules

b. Majority Voting Rules

c. Logrolling

d. Arrow’s Impossibility Theorem

2. Representative Democracy

a. Elected Politicians

b. Public Employees

c. Special Interests

d. Other Actors

3. Explaining Government Growth

a. Conclusion

Answers to End-of-Chapter Questions

1.

a. Below, the preferences for each person.

b. C wins in every pair wise vote. Thus, there is a stable majority outcome, despite

the fact that persons 1, 2, and 3 have double-peaked preferences. This

demonstrates that although multi-peaked preferences may lead to voting

inconsistencies, this is not necessarily the case.

2. The passage of the agriculture bill in 2007 is consistent with the logrolling model.

Because the members of rural areas were able to trade votes with those in urban areas

3.

a. Neither issue would pass with majority voting as in both cases, two voters of the

three would vote against the each issue because they receive negative net benefits.

1 2 3 4 A B C D

Person 1 Person 2 Person 3 Person 4 Person 5

This is not efficient because issue X has a positive total net benefit and should be

funded.

b.With logrolling, voters A and B can trade votes. A will vote for issue Y if B votes

for issue X, but C will not vote for either project. Both issues will pass with two

votes for and one against. This is not efficient because issue Y has a negative

total net benefit.

c.If side payments were allowed A could pay B to vote for issue X (A would not

pay C because C would require a higher payment than B), and B could pay A or C

to vote for issue Y. This would result in the same inefficient outcome as in b.

d.If side payments were allowed A would have to pay B at least 1 to vote for issue

X. A would only be willing to pay less than 6. B would have to pay A or C at

least 3, but no more than 4 to entice him to vote for issue Y.

4.Yes, it is consistent, because the theory says that when unanimity is required, no

decisions are likely to be made. A majority system might be more suitable, although it is subject to cycling and other problems.

5.When the policy changed to allow and encourage female voting, female voters became

the majority, so it is sensible that the median voter is now a woman. Given this, the median voter theorem suggests that politicians should shift their positions to more closely align with the views of women.

6.When there is a vote over five options, there is the chance that a potential majority vote is

split between four relatively preferred options, and the fifth option wins. The winning option may have been voted down if it had been a two-way vote with any of the other options. Further, if preferences are not single-peaked, cycling and inconsistent public decisions may emerge.

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