Theory and Decision

, Volume 81, Issue 1, pp 33–52 | Cite as

Veto players and equilibrium uniqueness in the Baron–Ferejohn model

Article

Abstract

In political economy, the seminal contribution of the Baron–Ferejohn bargaining model constitutes an important milestone for the study of legislative policy making. In this paper, we analyze a particular equilibrium characteristic of this model, equilibrium uniqueness. The Baron–Ferejohn model yields a class of payoff-unique stationary subgame perfect equilibria (SSPE) in which players’ equilibrium strategies are not uniquely determined. We first provide a formal proof of the multiplicity of equilibrium strategies. This also enables us to establish some important properties of SSPE. We then introduce veto players into the original Baron–Ferejohn model. We state the conditions under which the new model has a unique SSPE not only in terms of payoffs but also in terms of players’ equilibrium strategies.

Keywords

Multilateral bargaining Equilibrium uniqueness Veto players 

References

  1. Baron, D. P., & Ferejohn, J. A. (1989). Bargaining in legislatures. American Political Science Review, 83, 1181–1206.CrossRefGoogle Scholar
  2. Baron, D. P., & Kalai, E. (1993). The simplest equilibrium of a majority-rule division game. Journal of Economic Theory, 61, 290–301.CrossRefGoogle Scholar
  3. Bowen, T. R. (2014). Legislated protection and the WTO. International Economic Review (forthcoming).Google Scholar
  4. Celik, L., Karabay, B., & McLaren, J. (2013). Trade policy making in a model of legislative bargaining. Journal of International Economics, 91, 179–190.CrossRefGoogle Scholar
  5. Celik, L., Karabay, B., & McLaren, J. (2015). When is it optimal to delegate? The theory of fast-track authority. American Economic Journal: Microeconomics, 7, 347–389.Google Scholar
  6. Diermeier, D., & Merlo, A. (2004). An empirical investigation of coalitional bargaining procedures. Journal of Public Economics, 88, 783–797.CrossRefGoogle Scholar
  7. Diermeier, D., & van Roozendaal, P. (1998). The duration of cabinet formation processes in Western multi-party democracies. British Journal of Political Science, 28, 609–626.CrossRefGoogle Scholar
  8. Eraslan, H. (2002). Uniqueness of stationary equilibrium payoffs in the Baron-Ferejohn model. Journal of Economic Theory, 103, 11–30.CrossRefGoogle Scholar
  9. Fudenberg, D., & Tirole, J. (1991). Game Theory. Cambridge, MA: MIT Press.Google Scholar
  10. Laver, M., & Schofield, N. (1998). Multiparty Government: The Politics of Coalition in Europe. Ann Arbor: University of Michigan Press.CrossRefGoogle Scholar
  11. McCarty, N. M. (2000a). Presidential pork: executive veto power and distributive politics. American Political Science Review, 94, 117–129.CrossRefGoogle Scholar
  12. McCarty, N. M. (2000b). Proposal rights, veto rights, and political bargaining. American Journal of Political Science, 44, 506–522.CrossRefGoogle Scholar
  13. Müller, W., & Strøm, K. (2000). Coalition Governments in Western Europe. Oxford: Oxford University Press.Google Scholar
  14. Nunnari, S. (2012). Dynamic legislative bargaining with veto power. Working paper, University of California, San Diego.Google Scholar
  15. Primo, D. M. (2006). Stop us before we spend again: institutional constraints on government spending. Economics and Politics, 18, 269–312.CrossRefGoogle Scholar
  16. Primo, D. M. (2007). A comment on Baron and Ferejohn (1989): The open rule equilibrium and coalition formation. Public Choice, 130, 129–135.CrossRefGoogle Scholar
  17. Riker, W. H. (1962). The Theory of Political Coalitions. New Haven: Yale University Press.Google Scholar
  18. Snyder, J., Ting, M., & Ansolabehere, S. (2005). Legislative bargaining under weighted voting. American Economic Review, 95, 981–1004.CrossRefGoogle Scholar
  19. Tsebelis, G. (2002). Veto Players: How Political Institutions Work. Cambridge: MIT Press.CrossRefGoogle Scholar
  20. Winter, E. (1996). Voting and vetoing. American Political Science Review, 90, 813–823.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.National Research University Higher School of EconomicsMoscowRussia
  2. 2.CERGE-EI (A Joint Workplace of Charles University and the Economics Institute of the Academy of Sciences of the Czech Republic)PragueCzech Republic
  3. 3.School of Economics, Finance and MarketingRMIT UniversityMelbourneAustralia

Personalised recommendations