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

 

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.