ch05 - Chapter 5 Public Choice and the Political Process 1...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter 5 Public Choice and the Political Process
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 The Supply of Public Goods Through Political Institutions Public Choice involves decisions being made through political interaction of many persons according to pre-established rules.
Background image of page 2
3 Political Equilibrium A political equilibrium is an agreement on the level of production of one or more public goods, given the specified rule for making the collective choice and the distribution of tax shares among individuals .
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Tax Shares or Tax Prices Tax shares , sometimes called tax prices , are pre-announced levies assigned to citizens. They are a portion of the unit cost of a good proposed to be provided by government . t i = tax share to individual i Σ t i = average cost of good
Background image of page 4
5 Individual's Choice Individuals make choices given their most preferred political outcomes. Each person will favor the quantity of the government-supplied good corresponding to the point at which the person’s tax share is exactly equal to the marginal benefit of the good to that person.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Figure 5.1 The Most Preferred Political Outcome of A Voter Tax per Unit of Output t i MB i Q* Z Tax Output per Year 0
Background image of page 6
7 The Choice to Vote or Not Rational Ignorance is the idea that, to many voters, the marginal cost of obtaining information concerning an issue is greater than the marginal benefit of gaining that information. This leads the voter to fail to gather the information and then not to vote.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 Determinants of Political Equilibrium the public choice rule average and marginal costs of the public good information available on the cost and benefit the distribution of the tax shares distribution of benefits among voters
Background image of page 8
9 Figure 5.2 Political Equilibrium Under Majority Rule With Equal Tax Shares 350 MC = AC 50 t Σ MB E Marginal Benefit,Cost, and Tax (Dollars) Security Guards per Week 0 1 2 3 4 5 6 7 MB A MB B MB C MB F MB G MB H MB M
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10 Median Voter Model The median voter model assumes that the voter whose most-preferred outcome is the median of the most- preferred political outcomes of all those voting will become the political equilibrium.
Background image of page 10
11 Voting to Provide Security Protection and Election Result under Simple Majority Rule Increase Security Guards per Week to: 1 2 3 4 5 6 7 Voters A Y N N N N N N B Y Y N N N N N C Y Y Y N N N N M Y Y Y Y N N N F Y Y Y Y Y N N G Y Y Y Y Y Y N H Y Y Y Y Y Y Y Result Pass Pass Pass Pass Fail Fail Fail
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Implications of Median Voter
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 43

ch05 - Chapter 5 Public Choice and the Political Process 1...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online