《财政学教学资料》ch05.docVIP

Chapter 5 Public Choice and thePolitical Process Instructional Objectives Public choice theory and economic analysis of the political process are the subjects of this chapter. The concept of political equilibrium is introduced as a means of providing the student a way of comparing market equilibrium with public sector equilibrium. Positive analysis is used to predict the outcome of political interaction under majority rule, while normative analysis is used to explore efficiency aspects of?political interaction. At the outset of the chapter, the student is made aware of the simplifying assumptions to be used. The dependent variable is the output of a pure public good over a given time period. It is?also assumed that each voter knows his or her share of the cost per unit of the public good. These simplifications allow the determination of the conditions required for political equilibrium. A major goal of the chapter is to make clear the differences between political and market equilibrium. To do so, an analogy is made between the tax shares, t, of citizens for public goods and the prices of market goods. It is then a simple matter to point out that a person’s most-preferred political outcome corresponds to the output for which MB = t. The political equilibrium itself depends on the public choice rule, information available to voters, the distribution of tax shares among voters, and the distribution of benefits of the public good among voters. The median voter model is emphasized in the chapter, and its implications for the behavior of political candidates is highlighted. The possibility of nonexistence of political equilibrium due to multiple-peaked preferences is also explored. There is, as well, a discussion of the likelihood of multiple-peaked preferences and Arrow’s impossibility theorem. The chapter also integrates important issues concerning the political process with the theory of public choice. These issues include (1)?incentives to vote and the impact of