bertrand edgeworth oligopoly in large markets the relation between perfectly competitive and monopolistically competitive equilibria is analysed for a bertrand edgeworth model of a single market in which capacity constrained firms choose prices as strategies the market always has a nash equilibrium in pure or mixed strategies as the number of firms increases the corresponding equilibria converge in distribution to a perfectly competitive price this result provides a justification for perfect competition that is based on an explicit account of price formation however monopoly prices persist with a positive but vanishing probability regularity or well defined inverse demand functions are not required

electoral politics and the executive veto a predictive theory we argue that winner take all voting in states and the unequal distribution of electoral votes across states in presidential elections makes incumbent presidents rationally place more weight on the preferences of voters in closely contested larger states when making policy decisions this hypothesis is tested by examining whether presidential veto decisions are influenced by the floor votes of senators from these electorally crucial states in a pooled sample of 325 individual bills from 1970 through 1988 we find significant evidence of this behavior by incumbent presidents

supermajority rule and the law of 1 n this paper investigates the impact of a supermajority rule on the law of 1 n which posits that a larger number of districts increases the size of government our analysis suggests that supermajority rule despite the claim that it restrains excessive spending increases the 1 n effect because qualified majorities require logrolling to attract additional members using data from us states from 1970 to 2007 we find that the adoption of a supermajority rule has a robust worsening effect on the fiscal commons problem identified by the law of 1 n

politics partisanship and the power to veto does gubernatorial line item veto power affect state budgets abstracthow does line item veto liv power affect a governor s ability to structure the state budget is liv power only relevant as a partisan tool is it still relevant when the state legislature can override the veto we use a rich disaggregated data set to test the effect of the gubernatorial liv on state budgets controlling for political factors such as party affiliation of the governor and legislature minority status of the governor and the legislature s ability to override a liv our results suggest that liv power has very weak influence if any on governors ability to influence state budgets

bargaining in bicameral legislatures when and why does malapportionment matter malapportionment of seats in bicameral legislatures it is widely argued confers disproportionate benefits to overrepresented jurisdictions ample empirical research has documented that unequal representation produces unequal distribution of government expenditures in bicameral legislatures the theoretical foundations for this empirical pattern are weak it is commonly asserted that this stems from unequal voting power per se using a noncooperative bargaining game based on the closed rule infinite horizon model of baron and ferejohn 1989 we assess the conditions under which unequal representation in a bicameral legislature may lead to unequal division of public expenditures two sets of results are derived first when bills originate in the house and the senate considers the bill under a closed rule the equilibrium expected payoffs of all house members are surprisingly equal second we show that small state biases can emerge when 1 there are supermajority rules in the malapportioned chamber 2 the senate initiates bills which produces maldistributed proposal probabilities and 3 the distributive goods are lumpy we thank seminar participants at new york university the university of pennsylvania and the 2002 annual meeting of the american political science association for helpful comments james snyder and michael ting gratefully acknowledge the financial support of national science foundation grant ses 0079035 stephen ansolabehere gratefully acknowledges the support of the carnegie corporation under the carnegie scholars program this paper was written while michael ting was at the university of north carolina at chapel hill and he thanks the department of political science there for their support

predictability and power in legislative bargaining the rules and procedures of legislatures often provide legislators with information bearing on the identities of upcoming proposers for a broad class of legislative bargaining games we establish that markovian equilibria necessarily deliver all economic surplus to the first proposer whenever the information structure permits the legislators to rule out some minimum number of proposers one round in advance this result holds regardless of the recognition process and even if players vary in patience and risk aversion it raises the possibility that procedures adopted in the interest of transparency may contribute to the imbalance of political power

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

the power of the proposal maker in a model of endogenous agenda formation in a distributive setting this study examines a voting procedure for which agenda formation is endogenous it is found not surprisingly that agenda formation is another avenue for strategic manipulation of the voting process and provides the member to first take the floor an asymmetric advantage what is surprising is the degree of this advantage we find that the initial proposal maker earns a share of the fixed resource exceeding 1 for an majority rule and this is regardless of the number of members the voting rule is found to be an effective instrument in at least partially offsetting the power of the proposal maker while maintaining the stability of the voting process

dynamic legislative policy making abstract we prove existence of stationary markov perfect equilibria in an infinite horizon model of legislative policy making in which the policy outcome in one period determines the status quo for the next we allow for a multidimensional policy space and arbitrary smooth stage utilities and we assume preferences and the status quo are subject to arbitrarily small shocks we prove that equilibrium continuation values are differentiable and that proposal strategies are continuous almost everywhere we establish upper hemicontinuity of the equilibrium correspondence and we provide weak conditions under which each equilibrium of our model determines an aperiodic transition probability over policies we establish a convergence theorem giving conditions under which the invariant distributions generated by stationary equilibria must be close to the core in a canonical spatial model finally we extend the analysis to sequential move stochastic games and to a version of the model in which the proposer and voting rule are determined by play of a finite perfect information game

an examination of the market for favors and votes in congress this paper examines the strategies that horse traders and power brokers adopt in trading favors to pass legislation although the favors that they trade are generally impossible to observe the paper develops a model that allows tests of favor trading with data from the senate vote on the byrd amendment to the 1990 clean air act i conduct such a test the test provides evidence that on this vote i favor trading occurred ii the coalition leaders practiced price discrimination and iii the coalition leaders did not collude with each another

bertrand edgeworth duopoly with linear costs a tale of two paradoxes consider a bertrand edgeworth duopoly with linear cost functions if the firms produce to stock then no nash equilibrium in pure strategies exists if however the firms produce to order then all subgame perfect nash equilibria involve the firms charging a price equal to marginal cost d 2005 elsevier b v all rights reserved

the existence of equilibrium in discontinuous economic games ii applications in part i of this study we established two existence theorems for mixed strategy equilibrium in games with discontinuous payoff functions see theorems 4 4 and 5 5 in dasgupta and maskin 1986 hereafter d m 1986 in this second part we use the second of these two theorems to prove the existence of mixed strategy equilibrium in some wellknown discontinuous economic games that fail to have pure strategy equilibria the models we analyse are the bertrand edgeworth example of price setting duopolists with capacity constraints see section 2 2 price competition among firms producing differentiated products hotelling 1929 and d aspremont gabszewicz and thisse 1979 see section 2 3 spatial competition eaton and lipsey 1975 and shaked 1975 see section 3 and models of market dependent information rothschild and stiglitz 1976 and wilson 1977 section 4 the paper concludes section 5 with a classification of these models

uniqueness of stationary equilibrium payoffs in coalitional bargaining we study a model of sequential bargaining in which in each period before an agreement is reached the proposer s identity is randomly determined the proposer suggests a division of a pie of size one each other agent either approves or rejects the proposal and the proposal is implemented if the set of approving agents is a winning coalition for the proposer the theory of the fixed point index is used to show that stationary equilibrium expected payoffs of this coalitional bargaining game are unique this generalizes eraslan 34 insofar as a there are no restrictions on the structure of sets of winning coalitions b different proposers may have different sets of winning coalitions c there may be a positive probability that no proposer is selected

rationing rules and bertrand edgeworth equilibria in large markets abstract in a market with concave downward sloping demand and symmetric firms which compete in prices with constant marginal costs and capacity limits it is shown that the supports of the symmetric mixed strategy nash equilibria converge to the unique competitive price provided that unsatisfied demand is allocated according to the surplus maximizing rationing rule

why should majority voting be unfair the common use of majority rule in group decision making is puzzling in theory it inequitably favors the proposer and paradoxically it disadvantages voters further if they are inequity averse in practice however outcomes are equitable the present paper analyzes data from a novel experimental design to identify the underlying social preferences our experiment compares one shot and indefinite horizon versions of random proposer majority bargaining the baron ferejohn game which allow us to disentangle behaviors compatible with altruism inequity aversion and reference dependent altruism most subjects are classified as reference dependent altruists around 10 are inequity averse subjects are egoistic when their payoff is below their reference point they become efficiency concerned when satisfied and the reference point is either the ex ante expectation or the opponent s payoff finally we successfully test rda out of sample on a number of distribution and bargaining games from three seminal social preference experiments

proposal rights and political power in a canonical model of sequential collective bargaining over a divisible good we show that equilibrium expected payoffs are not restricted by players voting rights or their impatience for all monotonic voting rules and discount factors and for all divisions of the good among players there exists a stationary proposal making rule such that this division represents players expected payoffs in a stationary subgame perfect nash equilibrium in pure strategies the result highlights the significance of proposal rights in determining political power in collective deliberations t he purpose of this article is to further our understanding of political power in a committee environment we consider the problem of a group of two or more agents who must split a fixed divisible good agents cannot use physical force to divide this good our goal is to clarify the role and relative significance of other features of the political environment such as voting rights proposal rights agents patience etc in determining political power following shapley and shubik 1954 we gauge political power in terms of expected outcomes rather than a priori equate it with individual prerogatives 1 in that spirit political power is the share of the divisible good that agents can expect to obtain when their behavior conforms to an appropriately defined equilibrium notion 2 we model committee interaction using a canonical sequential bargaining game in each period a member of the committee is recognized with some probability that is fixed across periods and proposes a division of the good committee members then vote on the proposal if the proposal is approved in accordance with the underlying voting rule the proposed division is implemented and the

presidential pork executive veto power and distributive politics mitigated to the extent that the president prefers spending in some districts over others the model also generates new insights and predictions about fiscal policy under the separation of powers including the effects of divided government electoral rules and term limitations for the executive

the line item veto and public sector budgets evidence from the states abstract the paper examines the claim that gubernatorial line item veto power reduces state spending analysis of a rich set of state budget data indicates that long run budgets are not altered by an item veto and that in the short run the item veto s potency is contingent upon the political setting in certain circumstances governors with political incentives to use an item veto alter spending and revenues in a statistically significant and quantitatively important fashion these results suggest that state budgets have not been importantly altered as a result of the existence of the line item veto and shed doubt on the use of the line item veto to reduce federal government spending

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

the president and the distribution of federal spending scholarship on distributive politics focuses almost exclusively on the internal operations of congress paying particular attention to committees and majority parties this article highlights the president who has extensive opportunities both ex ante and ex post to influence the distribution of federal outlays we analyze two databases that track the geographic spending of nearly every domestic program over a 24 year period the largest and most comprehensive panels of federal spending patterns ever assembled using district and county fixed effects estimation strategies we find no evidence of committee influence and mixed evidence that majority party members receive larger shares of federal outlays we find that districts and counties receive systematically more federal outlays when legislators in the president s party represent them

computation of equilibrium values in the baron and ferejohn bargaining model abstract computation of exact equilibrium values for n player divide the dollar legislative bargaining games as in baron and ferejohn 1989 with general quota voting rules recognition probabilities and discount factors can be achieved by solving at most n bivariate square linear systems of equations the approach recovers eraslan s 2002 uniqueness result and relies on a characterization of equilibria in terms of two variables that satisfy a pair of piecewise linear equations

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

crawling peg and the variability of the real exchange rate abstract this paper assesses the extent to which exchange rate policies of crawling galloping peg in argentina brazil chile and uruguay did contribute to the overall variability of their real exchange rates in the 1970 s

differentiating mixed member electoral systems mixed member majoritarian and mixed member proportional systems and government expenditures the increasing use of mixed member electoral systems has led to an explosion of research attempting to specify their effects yet there has been no work on the economic policy effects of such systems even though this has been a significant subject of debate for scholars analyzing other electoral systems an analysis of mixed member system policy effects is problematic given the wide variation in institutional rules among different systems this article attempts to determine whether the institutional differences between mixed member majoritarian mmm and mixed member proportional mmp systems lead to differences in policy outputs the political economy literature finds that government expenditures are positively correlated with electoral system proportionality our statistical analysis of government expenditures in 17 mixed member systems between 1990 and 2000 shows that mmp systems which are more proportional than mmm systems are correlated with higher levels of government spending thus the mmm mmp

existence of pure strategy nash equilibrium in bertrand edgeworth oligopolies abstract this article is searching for necessary and sufficient conditions which are to be imposed on the demand curve to guarantee the existence of pure strategy nash equilibrium in a bertrand edgeworth game with capacity constraints

energy polarization and popular representation evidence from the russian duma in this article we introduce the term energy polarization to explain the politics of energy market reform in the russian duma our model tests the impact of regional energy production party cohesion and ideology and electoral mandate on the energy policy decisions of the duma deputies oil gas and electricity bills and resolution proposals between 1994 and 2003 we find a strong divide between single member district smd and proportional representation pr deputies high statistical significance of gas production is demonstrated throughout the three duma terms and shows gazprom s key position in the post soviet russian economy oil production is variably significant in the two first dumas when the main legislative debates on oil privatization occur there is no constant left right continuum which is consistent with the deputies proclaimed party ideology the pro and anti reform poles observed in our poole based single dimensional scale are not necessarily connected with liberal and state oriented regulatory policies respectively party switching is a solid indicator of russia s polarized legislative dynamics when it comes to energy sector reform

executive veto legislative override and structure induced equilibrium in this study the structure induced equilibrium approach for modeling democratic institutions is extended to allow for the added structural features of executive veto and legislative override a multidimensional model is presented for a budgetary process involving three actors a legislature an appropriations committee and an executive in order to focus attention on the role of the veto and override possibilities simplifying assumptions are made with regard to other aspects of the agenda formation process in particular the committee has monopoly agenda power a closed amendment control rule is operative and perfect foresight expectations are held by the committee and the executive given these assumptions utility maximization by the several actors generates a budget outcome characterized as a structure induced equilibrium the general model is illustrated geometrically with a two dimensional example permitting budget outcomes to be analyzed for various combinations of veto rules and override provisions the analysis demonstrates that budget outcomes are sensitive to alternative specifications of veto rules and override provisions in the illustration executive veto power is shown to vary directly with both the permissiveness of the veto rule and the stringency of the override provision similar relationships however are not found to exist for total budget expenditures

divided government and u s trade policy theory and evidence if different parties control the u s congress and white house the united states may maintain higher import protection than otherwise this proposition follows from a distributive politics model in which congress can choose to delegate trade policymaking to the president when the congressional majority party faces a president of the other party the former has an incentive to delegate to but to constrain the president by requiring congressional approval of trade proposals by up or down vote this constraint forces the president to provide higher protection in order to assemble a congressional majority evidence confirms that 1 the institutional constraints placed on the president s trade policymaking authority are strengthened in times of divided government and loosened under unified government and 2 u s trade policy was significantly more protectionist under divided than under unified government during the period 1949 90

voting weights and formateur advantages in the formation of coalition governments over the last two decades a large and important literature has emerged that uses game theoretic models of bargaining to study legislative coalitions to test key predictions of these models we examine the composition of coalition governments from 1946 and 2001 these predictions are almost always expressed in terms of parties minimal integer voting weights we calculate such weights for all parliamentary parties in addition we develop a statistical model that nests the predictions of many of these models of the distribution of posts we find that for parties that join but did not form the government there is a linear relationship between their share of the voting weight in parliament and their share of cabinet posts the party that forms the government the formateur receives a substantial bonus relative to its voting weight the latter finding is more consistent with proposal based bargaining models of coalition formation and suggests that parties gain disproportionate power not because of their size but because of their proposal power

what should government do problems of social cost externalities and all that public choice as a field introduced the framework for a methodical economic analysis of political markets the output of these markets of course is reflected by the role that government plays that is specifically true with respect to the organization of economic activity gordon tullock has studied a myriad of aspects of this topic for more than half a century we examine his answers to the question of what should government do and how they have influenced and are still impacting the discussion on the proper role of government in the economy

bertrand edgeworth equilibrium with a large number of firms abstract we examine a model of price competition with strictly convex costs where the firms simultaneously decide on both price and quantity are free to supply less than the quantity demanded and there is discrete pricing if firms are symmetric then for a large class of residual demand functions there is a unique equilibrium in pure strategies whenever for a fixed grid size the number of firms is sufficiently large moreover this equilibrium price is within a grid unit of the competitive price the results go through to a large extent when the firms are asymmetric or they are symmetric but play a two stage game and the tie breaking rule is weakly manipulable

executive veto power and credit claiming the line item veto has often be heralded as an effective tool in reducing pork barrel spending a model of veto bargaining over public goods and pork barrel spending in the presence of credit claiming incentives demonstrates that the item veto does not necessarily reduce pork barrel spending and reduces the executive s ability to attain his preferred level of spending on public goods the item veto also has an ambiguous effect on the balance of power between the executive and the legislature while strengthening the position of the legislative agenda setter within the legislature

executive budget proposal executive veto legislative override and uncertainty a comparative analysis of the budgetary process this study examines the roles of the executive budgetary proposal the executive veto the legislative override and legislative uncertainty about the executive s preferences in determining the outcome of a budgetary process a sequential model of the budgetary process with three institutional agents a legislature an appropriations committee and an executive is presented to focus attention on the executive proposal the veto the override provision and uncertainty simplifying assumptions are made 1 the appropriations committee has monopoly agenda power and 2 there is a closed amendment control rule in order to characterize sequential equilibria of various combinations of veto rules and override provisions we examine a particular arrangement of agents preferences and a two item budget the results demonstrate that the final budget depends critically on the executive proposal the executive veto rule the override provision and the uncertainty we achieve three striking results first the executive proposal may be effective in reducing the frequency of the exercised veto second for a given override provision a movement from the item veto to the item reduction veto leaves the executive worse off in some cases third with the same change in institutions the government budget may increase

seniority in legislatures we construct a stochastic game model of a legislature with an endogenously determined seniority system we model the behavior of the legislators as well as their constituents in an infinitely repeated divide the dollar game each legislative session must make a decision on redistributional issues modeled as a divide the dollar game however each session begins with a vote in which the legislators decide by majority rule whether or not to impose on themselves a seniority system legislative decisions on the redistributional issues are made by the baron ferejohn rule an agenda setter is selected by a random recognition rule which in our model is a function of the seniority system selected the agenda setter makes a proposal on redistributional issues and the legislature then votes whether to accept or reject the agenda setters proposal if the legislature rejects the proposal another agenda setter is randomly selected and the process is repeated if the legislature accepts the proposal the legislative session ends and the voters in each legislative district vote whether to retain their legislator or throw it out of office the voters verdict determines the seniority structure of the next period legislature we find a stationary equilibrium to the game having the property that the legislature imposes on itself a non trivial seniority system and that legislators are always reelected