Efficiency, Welfare, and Political Competition--论文代写范文精选

机制设计的方法作用是提供了一个严格的证据。相比之下,政治经济学方法往往有一定的限制政策。这些限制缺乏理论基础,但出于务实的理由,在政治竞争的典范中有一定的影响。下面的essay代写范文进行讲述。

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, the unique symmetric equilibrium is such that 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. 
Keywords: Political Competition; Asymmetric Information; Public Goods; Nonlinear Income Taxation; Redistributive Politics.

Introduction 
Mechanism design has become the dominant paradigm for a normative analysis of publicly provided goods or tax systems. The strength of this approach is that it provides a rigorous justification of the constraints that a policy-maker faces. Available technologies and endowments give rise to resource constraints, privately held information gives rise to incentive compatibility constraints, predetermined institutional arrangements may generate another layer of constraints such as, for instance, the requirement of voluntary participation. Political economy approaches, by contrast, often impose additional restrictions on the set of admissible policies. These restrictions lack a theoretical foundation, but are imposed for pragmatic reasons, e.g. because they ensure the existence of a Condorcet winner in a model of political competition. 

For instance, for redistributive income taxation, a normative analysis in the tradition of Mirrlees (1971) characterizes a welfare-maximizing income tax with no a priori assumption on the functional form of the tax function. A well-known political economy approach to this problem by Meltzer and Richard (1981) is based on the assumption that all individuals face the same marginal tax rate, and that tax revenues are used to finance a uniform lump-sum transfer to all citizens. One can thereby show that the preferred policy of the voter with median income wins a majority against any alternative policy proposal. This result, however, does not extend to the domain of non-linear income tax schedules: the median voter’s preferred non-linear income tax schedule does not win a majority against an alternative tax schedule under which the median level of income is taxed more heavily but all other incomes are treated more favorably. 

More generally, the use of different models in normative and positive public finance makes it difficult to provide answers to the following questions: does political competition generate Pareto-efficient outcomes? Does it generate welfare-maximizing outcomes? Is there a sense in which political competition gives rise to political failures, in analogy to the theory of market failures. In this paper, we study political competition from a mechanism design perspective. Our framework covers both publicly provided goods and redistributive income taxation. We ask which mechanism emerges as a result of political competition under the assumption that a politicians’ objective is to win an election, as in Downs (1957). Politicians can propose any mechanism that is incentive-compatible and resource-feasible. Moreover, we consider a policy domain that is larger than the one usually considered in normative treatments of public goods provision or income taxation: we give politicians the possibility to accompany, say, a proposed income tax schedule with a distribution of favors in the electorate. 

These favors are unrelated to the voters’s preferences for publicly provided goods or their productive abilities, and, they would not be needed to achieve a Paretoefficient, or welfare-maximizing outcome. Politicians may still want to use them so as to generate more support for their policy platform. In political economy analysis, this is often referred to as pork-barrel spending.1 Finally, we assume that the preferences of voters are quasi-linear in the consumption of private goods. We prove two theorems. Theorem 1 can be interpreted as a first welfare theorem for political competition. It claims that, in any symmetric equilibrium, both politicians propose a surplus-maximizing policy. Thus, the political equilibrium allocation cannot be Pareto-improved upon in the set of resource-feasible policies. 

For a problem of income taxation, Theorem 1 implies that, in a political equilibrium, there is no use of distortionary tax instruments. Transfers of resources between voters take place in equilibrium, but are financed exclusively with non-distortionary lump-sum transfers.2 For a model that involves the provision of a non-rival good, such as clean air or national defense, Theorem 1 implies a political equilibrium allocation that satisfies the efficiency condition which is known as the Samuelson rule, Samuelson (1954). For a model with publicly provided private goods, such as health care or education, Theorem 1 implies that the political equilibrium allocation gives rise to the same consumption levels as a competitive market allocation, i.e. marginal benefits of consumption are equalized across voters. Theorem 2 is concerned with the question whether welfare-maximizing policies have a chance in the political process. To formalize this question, we introduce an assumption of risk-aversion. 

This assumption implies that a welfare-maximizing policy does not involve pork-barrel spending: from an ex-ante perspective, all voters prefer an equal treatment over a random allocation of special treatments. We impose no further restriction on the set of welfare-maximizing policies, i.e. any policy that maximizes a weighted average of the voters’ utility levels over the set of incentive-compatible and feasible policies will be referred to as a welfare-maximizing policy. Theorem 2 then asserts that there is a policy that wins a majority against any welfare-maximizing policy. This policy is surplus-maximizing and involves a random allocation of special treatments. For a model of income taxation, the theorem implies that any welfare-maximizing policy that involves a transfer of resources from richer individuals to poorer individuals can be defeated by a policy that has no such transfers, but distributes favors in such a way that many rich and some poor voters will be attracted. To illustrate these insights, suppose that there are only two groups of individuals. A large group of individuals with low productive abilities and a small group of more productive individuals. 

The more productive individuals have a comparatively low cost of productive effort, so that when confronted with an income tax schedule, these individuals choose a high level of effort and therefore end up being richer than the less productive individuals. If pork-barrel spending is excluded from the analysis, a political equilibrium gives rise to the preferred income tax schedule of the larger group, here the income tax schedule that maximizes a Rawlsian welfare function. Theorem 2 implies that a surplusmaximizing policy combined with a particular distribution of favors in the electorate will defeat this policy. This surplus-maximizing policy will be supported by a certain fraction of the poor, namely those who receive a lot of pork, and an even larger fraction of the rich, who benefit also from getting rid of the Rawlsian income tax schedule. 

The total effect is that a majority votes against the Rawlsian policy. The reminder is organized as follows. The next section reviews the related literature. Section 3 discusses an illustrative example. Section 4 contains our main results for a model of publicly provided goods. The proofs are in Section 5. Section 6 covers a model of income taxation. We discuss equilibrium existence in Section 7. Section 8 relates our analysis to other models of political competition. The last section contains concluding remarks. In the body of the text, we present our results under the assumption that there is a continuum of voters. The finite population analogue is presented in the Appendix. We also relegate some of our proofs to the Appendix.(paper代写)

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