Incentives and Political Economy (Clarendon Lectures in Economics)

0198294247......Page 1
Contents......Page 10
Preface......Page 6
Acknowledgements......Page 8
1.1 Political Economy with a Benevolent Monarch......Page 14
1.2 The Design of Democratic Institutions......Page 16
1.3 Political Economy in Democratic Countries......Page 18
1.4 The Chicago View of Interest Group Politics......Page 19
1.5 The Complete Contracting Approach......Page 23
1.6 The Incomplete Contracting Approach......Page 24
1.8 Endogenous Coalition formation......Page 26
I: Politicians as Informed Supervisors......Page 28
2.1 Introduction......Page 30
2.2 A Simple Supervision Model......Page 35
2.3 Optimal Incentives for the Politician......Page 44
2.4 Conclusion......Page 52
Appendix 2......Page 53
3.1 Introduction......Page 59
3.2 Separation of Powers and Yardstick Competition......Page 61
3.3 A Model with Three Types......Page 65
3.4 Single Non-benevolent Politician......Page 70
3.5 Separation of Politicians......Page 73
3.6 Generalization of the Results......Page 78
3.7 Conclusion......Page 82
Appendix 3......Page 84
4.1 Introduction......Page 86
4.2 The Model......Page 89
4.3 Optimal Symmetric Constitution......Page 92
4.4 Supervision and Division of Tasks......Page 96
4.5 Multidimensional Collusion Activities......Page 99
4.6 A Model with Three Politicians......Page 103
4.7 Optimal Supervisory Structures......Page 104
4.8 Conclusion......Page 107
Appendix 4......Page 108
II: Flexibility Versus Discretion in Constitutional Design......Page 112
5.1 Introduction......Page 114
5.2 Political Interference in the Rent-Efficiency Trade-off......Page 117
5.3 Ownership Matters......Page 120
5.4 Incentives against Capture as a Constitutional Rule......Page 122
5.5 Political Price Discrimination Versus Uniform Pricing......Page 125
5.6 Information Asymmetries, Costly Redistribution and the Cost of Democracy......Page 129
Appendix 5......Page 131
6.1 Introduction......Page 142
6.2 The Marginal Cost Pricing Rule......Page 147
6.3 Frisch\'s Comment......Page 149
6.4 Smith, Edgeworth, Hotelling......Page 151
6.5 Project Selection and Pricing Rules......Page 160
6.6 Conclusion......Page 162
Appendix 6......Page 163
7.1 Introduction......Page 167
7.2 The Basic Model......Page 170
7.3 Controlling the Discriminatory Power of Politicians through Constraints on the Choice of Instruments......Page 172
7.4 Delegating Discriminatory Power to the Politicians......Page 179
7.5 Multiple Privately Informed Interest Groups......Page 181
7.6 Conclusion......Page 186
Appendix 7......Page 188
III: Coalition Formation and Constitutional Design......Page 192
8.1 Introduction......Page 194
8.2 The Model......Page 197
8.3 Modeling Collusion......Page 201
8.4 Collusion under Complete Information......Page 203
8.5 Collusion under Complete Information with Extended Mechanisms......Page 207
8.6 Collusion under Incomplete Information......Page 208
8.7 Conclusion......Page 214
Appendix 8......Page 216
9.1 Introduction......Page 220
9.2 The Independent Case......Page 221
9.3 The Independent Case with Limits on Communication......Page 226
9.4 Risk Aversion......Page 229
9.5 Conclusion......Page 236
10. Concluding Remarks......Page 238
Appendix. Translations of Passages Quoted in French......Page 241
References......Page 244
B......Page 256
C......Page 257
D......Page 259
E......Page 260
I......Page 261
L......Page 263
N......Page 264
P......Page 265
R......Page 266
S......Page 267
U......Page 269
Z......Page 270