Public Choice

, Volume 52, Issue 3, pp 273–297

Balanced-budget redistribution as the outcome of political competition

Authors

  • Assar Lindbeck
    • Institute for International Economic StudiesUniversity of Stockholm
  • Jörgen W. Weibull
    • Institute for International Economic StudiesUniversity of Stockholm
Article

DOI: 10.1007/BF00116710

Cite this article as:
Lindbeck, A. & Weibull, J.W. Public Choice (1987) 52: 273. doi:10.1007/BF00116710

Abstract

This paper models balanced-budget redistribution between socio-economic groups as the outcome of electoral competition between two political parties. Equilibrium is unique in the present model, and a sufficient condition for existence is given, requiring that there be enough ‘stochastic heterogeneity’ with respect to party preferences in the electorate. The validity of Hotelling's ‘principle of minimum differentiation’, and of ‘Director's Law’, are examined under alternative hypotheses concerning administrative costs of redistributions, and voter's possibilities both of abstaining from voting and of becoming campaign activists for one of the parties. The policy strategy of expected-plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality. Incomes are fixed and known, so lump-sum taxation is feasible. However, constraints on tax/transfer differentiation between individuals are permitted in the analysis.

Copyright information

© Martinus Nijhoff Publishers 1987