But they face costs of collective decision-making. Name and describe the costs of making a collective decision to buy a vote. Assume a direct democracy in which a single pure public good is being supplied to a large number of citizen-voters. Assume that voter preferences are single-peaked so that the median voter theorem prevails. Vote buying can both increase and decrease efficiency.
Transactions costs are an important factor, however.
Explain the relevance of transactions costs. To answer this question, you should first briefly tell why an inefficient amount might be supplied. Next you should discuss how the inefficiency might be overcome. Finally, you should show the influence of transactions costs. You must define transactions costs and tell the different types.