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Economic theory of democracy

Economic theory of democracy ECONOMIC THEORY OF DEMOCRACY: AN EMPIRICAL TEST Miehael Boss Buchanan and Tullock (chapter 6), in the exposition of economic theory of democratic constitutions, argue that the individual expects zero external costs when collective decisions are made under an unanimity rule. This is because the individual, through his own action, can prevent collective outcomes adverse to his own interest. As conditions of unanimity rule are relaxed (majority rule, representative rule, etc.), the individual may expect external costs to increase. The rational individual will therefore willingly agree to relax inclusive voting require- ments only if there is compensation by some means (decreased decision costs or other organizational costs) that is equal to or greater than the expected increase in external costs. This compensation must then be the value the individual places on any control over collective outcomes that he is able to exercise. Consider now a situation in which the members of a democratically-organized collectivity must approve or reject a reorganization plan which ~ offer the members various tax savings (or increases) by centralizing collective organization and decision-making, Array all the members of the collectivity in a cumulative distribution according to the net tax effects under the reorganization plan as illustrated http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Public Choice Springer Journals

Economic theory of democracy

Public Choice , Volume 19 (1) – May 3, 2005

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References (3)

Publisher
Springer Journals
Copyright
Copyright
Subject
Economics; Public Finance; Political Science
ISSN
0048-5829
eISSN
1573-7101
DOI
10.1007/BF01718551
Publisher site
See Article on Publisher Site

Abstract

ECONOMIC THEORY OF DEMOCRACY: AN EMPIRICAL TEST Miehael Boss Buchanan and Tullock (chapter 6), in the exposition of economic theory of democratic constitutions, argue that the individual expects zero external costs when collective decisions are made under an unanimity rule. This is because the individual, through his own action, can prevent collective outcomes adverse to his own interest. As conditions of unanimity rule are relaxed (majority rule, representative rule, etc.), the individual may expect external costs to increase. The rational individual will therefore willingly agree to relax inclusive voting require- ments only if there is compensation by some means (decreased decision costs or other organizational costs) that is equal to or greater than the expected increase in external costs. This compensation must then be the value the individual places on any control over collective outcomes that he is able to exercise. Consider now a situation in which the members of a democratically-organized collectivity must approve or reject a reorganization plan which ~ offer the members various tax savings (or increases) by centralizing collective organization and decision-making, Array all the members of the collectivity in a cumulative distribution according to the net tax effects under the reorganization plan as illustrated

Journal

Public ChoiceSpringer Journals

Published: May 3, 2005

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