Abstract
This chapter characterizes the set of equilibria in a model of distributive politics with inefficient local public goods. Candidates compete for office in three districts under a majoritarian rule. For each district there is a project that brings a benefit only to this district if implemented, but the aggregate cost for society of financing the project surpasses the localized benefit. Candidates can commit to implement the projects in any number of districts. If projects are very inefficient, in equilibrium candidates commit not to implement any of them. However, if projects are inefficient but not too inefficient, in the unique equilibrium candidates randomize between financing projects in zero, one or two districts, so that in expectation 43% of projects are implemented.
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Notes
- 1.
The Gravina Island Bridge project, dubbed the “Bridge to Nowhere” during the 2008 US Presidential Election campaign, became a notorious example of a project whose aggregate costs far outweigh the local benefit. See http://en.wikipedia.org/wiki/Gravina_Island_Bridge.
- 2.
See Persson and Tabellini (2000), Chap. 7 for a broader survey and discussion on the topic of redistributive politics, and, more specifically, on the provision of local public goods.
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Eguia, J.X., Nicolò, A. (2011). On the Distribution of Particularistic Goods. In: Schofield, N., Caballero, G. (eds) Political Economy of Institutions, Democracy and Voting. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-19519-8_16
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