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Public Choice

, Volume 180, Issue 3–4, pp 285–300 | Cite as

The incumbent’s preference for imperfect commitment

  • Matthias WredeEmail author
Article

Abstract

Using a model with forward-looking voting strategies, we examine the tax policies of public officials who maximize the weighted average of rents and benefits to their specific electoral clienteles when commitment is possible. We assume that the degree of commitment to a tax policy can be varied through its design and institutional anchoring. At the center of the analysis lies the question of the extent to which public officials restrict the policy space of future governments. On the one hand, stronger restrictions make it more difficult for political opponents to enact unwanted policy changes, but, on the other hand, they also reduce the likelihood of reelection. We show that incumbents prefer perfect commitment to the absence of any commitment and that, from the point of view of an incumbent, imperfect commitment can be superior to perfect commitment. Imperfect commitment allows incumbents to raise their reelection chances either by binding themselves and causing the opponent to deviate or binding the opponent and deviating themselves.

Keywords

Rent seeking Electoral competition Imperfect commitment Rules Discretion 

JEL Classification

C72 D72 D78 

Notes

Acknowledgements

The comments from the editor and two anonymous referees of this journal and from Andreas Mense are greatly appreciated.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.School of Business and EconomicsFriedrich-Alexander University Erlangen-Nürnberg (FAU)NürnbergGermany
  2. 2.CESifoMunichGermany

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