Readings

General Books

The main book for the class is:

Buy at MIT Press Buy at Amazon Persson, Torsten, and Guido Tabellini. Political Economics: Explaining Economic Policy. Cambridge, MA: MIT Press, 2002. ISBN: 9780262661317. (Referred to as PT in the table below.)

The reading list gives the corresponding sections in PT. Also good to read:

Buy at Amazon Austen-Smith, David, and Jeffrey S. Banks. Positive Political Theory I: Collective Preference. Ann Arbor, MI: University of Michigan Press, 2000, ISBN: 9780472087211.

Buy at Amazon Buchanan, James M., and Gordon Tullock. The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbor, MI: University of Michigan Press, 1962. ISBN: 9780472061006.

Buy at MIT Press Buy at Amazon Grossman, Gene M., and Elhanan Helpman. Special Interest Politics. Cambridge, MA: MIT Press, 2002. ISBN: 9780262571678.

Buy at Amazon Mueller, Dennis C. Public Choice II. Rev. ed. Cambridge, UK: University of Cambridge Press, 1989. ISBN: 9780521379526.

Readings by Session

Note: non-starred readings may be used for political economy paper topics. Some sessions are marked as optional; they were omitted in the Fall 2008 version of this course, but are provided here for reference.

LEC # TOPICS READINGS
I. Basic one-dimensional electoral competition
1 General framework

*PT. Sections 2.2.1, 2.2.2, 3.1-3.3, 5.1, and 5.2.

*Hotelling, Harold. "Stability in Competition." Economic Journal 39 (1929): 41-57.

Buy at Amazon *Downs, Anthony. An Economic Theory of Democracy. New York, NY: Addison-Wesley, 1997. ISBN: 9780060417505.

Buy at Amazon Black, Duncan. The Theory of Committees and Elections. New York, NY: Springer-Verlag, 1986. ISBN: 9780898381894.

*Roberts, Kevin W. S. "Voting Over Income Tax Schedules." Journal of Public Economics 8 (1977): 329-340.

*Calvert, Randall L. "Robustness of the Multidimensional Voting Model: Candidate Motivations, Uncertainty, and Convergence." American Journal of Political Science 29 (1985): 69-95.

*Alesina, Alberto. "Credibility and Policy Convergence in a Two-Party System with Rational Voters." American Economic Review 78 (1988): 796-805.

Dixit, Avinash, Gene M. Grossman, and Faruk Gul. "The Dynamics of Political Compromise." Journal of Political Economy 108 (2000): 531-568.

Myerson, Roger B. "Analysis of Democratic Institutions: Structure, Conduct and Performance." Journal of Economic Perspectives 9 (1995): 77-89.

2 Applications: public goods and size of government

*PT. Section 6.1.

Bergstrom, Theodore C., and Robert P. Goodman. "Private Demands for Public Goods." American Economic Review 63 (1973): 280-296.

Romer, Thomas, and Howard Rosenthal. "The Elusive Median Voter." Journal of Public Economics 12 (1979): 143-170.

3 Applications: taxation and income redistribution

*PT. Section 14.1.

Meltzer, Allan H., and Scott F. Richard. "A Rational Theory of the Size of Government." Journal of Political Economy 89 (1981): 914-927.

Persson, Torsten, and Guido Tabellini. "Is Inequality Harmful for Growth?" American Economic Review 84 (1994): 600-621.

Alesina, Alberto, and Dani Rodrik. "Distributive Politics and Economic Growth." Quarterly Journal of Economics 109 (1994): 465-490.

4 Applications: macroeconomic policy

*PT. Section 16.2.

Alesina, Alberto. "Macroeconomic Policy in a Two-Party System as a Repeated Game." Quarterly Journal of Economics 102 (1987): 651-678.

Alesina, Alberto, John Londregan, and Howard Rosenthal. "A Model of the Political Economy of the United States." American Political Science Review 87 (1993): 12-33.

II. Multiparty competition and comparative electoral systems
5-7 Multiparty competition and comparative electoral systems

*Cox, Gary W. "Centripetal and Centrifugal Incentives in Electoral Systems." American Journal of Political Science 34 (1990): 903-35.

*Palfrey, Thomas R. "Spatial Equilibrium with Entry." The Review of Economic Studies 51 (1984): 139-156.

*Myerson, Roger B., and Robert J. Weber. "A Theory of Voting Equilibria." American Political Science Review 87 (1993): 102-114.

*Weber, Shlomo. "On Hierarchical Spatial Competition." Review of Economic Studies 59 (1992): 407-425.

*Besley, Timothy, and Stephen Coate. "An Economic Model of Representative Democracy." Quarterly Journal of Economics 112 (1997): 85-114.

III. Elections with imperfect information
8 Learning by voters

*McKelvey, Richard D., and Peter C. Ordeshook. "Sequential Elections with Limited Information." American Journal of Political Science 29 (1985): 480-512.

———. "Elections with Limited Information: A Fulfilled Expectations Model Using Contemporaneous Poll and Endorsement Data as Information Sources." Journal of Economic Theory 36 (1985): 55-85.

Feddersen, Timothy, and Wolfgang Pesendorfer. "Voting Behavior and Information Aggregation in Elections with Private Information." Econometrica 65, no. 5 (1997): 1029-1058.

Heidhues, Paul, and Johan Lagerlöf. "Hiding Information in Electoral Competition." Games and Economic Behavior 42, no. 1 (2002): 48-74.

Schultz, Christian. "The Politics of Persuasion when Voters are Rational." Scandinavian Journal of Economics 97, no. 3 (1995): 357-368.

9 Agency models

*PT. Sections 4.4, 9.2, and 16.1.

Barro, Robert J. "The Control of Politicians: An Economic Model." Public Choice 14 (1973): 19-42.

Ferejohn, John. "Incumbent Performance and Electoral Control." Public Choice 50 (1986): 5-25.

Rogoff, Kenneth. "Equilibrium Political Budget Cycles." American Economic Review 80 (1990): 21-37.

Buy at Amazon *Fearon, James. "Electoral Accountability and the Control of Politicians: Selecting Good Types Versus Sanctioning Poor Performance." In Democracy, Accountability, and Representation. Edited by A. Przeworski, Susan C. Stokes, and Bernard Manin. Cambridge, UK; New York, NY: Cambridge University Press, 1999, chapter 2. ISBN: 9780521646161.

Myerson, Roger B. "Effectiveness of Electoral Systems for Reducing Government Corruption: A Game Theoretic Analysis." Games and Economic Behavior 5 (1993): 118-132.

Duggan, John. "Repeated Elections with Asymmetric Information." Economics and Politics 12 (2000): 109-136.

IV. Models of political parties
10-11 Models of political parties

Aldrich, John H. "A Downsian Spatial Model with Party Activism." American Political Science Review 77 (1983): 974-990.

Buy at Amazon Aldrich, John H. Why Parties?: The Origin and Transformation of Political Parties in America. Chicago, IL: The University of Chicago Press, 1995, chapters 1 and 7. ISBN: 9780226012728.

*Snyder, James M., Jr. "Safe Seats, Marginal Seats, and Party Platforms: The Logic of Platform Differentiation." Economics and Politics 6 (1994): 201-213.

Roemer, John E. "Why the Poor Do Not Expropriate the Rich: An Old Argument in New Garb." Journal of Public Economics 70 (1998): 399-424.

Snyder, James M., Jr., and Michael M. Ting. "An Informational Rationale for Political Parties." American Journal of Political Science 46 (2002): 90-110.

Bernhardt, Dan, Larissa Campuzano, and Francesco Squintani. "On the Benefits of Party Competition." ELSE Working Paper No. 122. ESRC Centre for Economic Learning and Social Evolution, London, UK, June 2005. (This resource may not render correctly in a screen reader.PDF)

V. Multidimensional electoral competition
12 Possibility of a point-valued solution

*PT. Section 2.3.1.

*Plott, Charles R. "A Notion of Equilibrium and Its Possibility Under Majority Rule." The American Economic Review 57 (1967): 787-806.

*McKelvey, Richard D. "Intransitivities in Multidimensional Voting Models and Some Implications for Agenda Control." Journal of Economic Theory 12 (1976): 472-482.

Patty, John, James M. Snyder, Jr., and Michael M. Ting. 2008. "Two's Company, Three's an Equilibrium: Strategic Voting and Multicandidate Elections." Unpublished paper, July 2008. (This resource may not render correctly in a screen reader. PDF)

13 Set-valued solution concepts

Feld, Scott L., and Bernard Grofman. "Necessary and Sufficient Conditions for a Majority Winner in n-Dimensional Spatial Voting Games: An Intuitive Geometric Approach." American Journal of Political Science 31 (1987): 709-728.

Miller, Nicholas R., Bernard Grofman, and Scott L. Feld. "The Geometry of Majority Rule." Journal of Theoretical Politics 1 (1989): 379-406.

*Kramer, Gerald H. "Dynamical Model of Political Equilibrium." Journal of Economic Theory 16 (1977): 310-34.

McKelvey, Richard D. "Covering Dominance, and Institution-Free Properties of Social Choice." American Journal of Political Science 30 (1986): 283-314.

*Cox, Gary W. "The Uncovered Set and the Core." American Journal of Political Science 31 (1987): 408-422.

13a (optional) Probabilistic voting models

Hinich, Melvin J., John O. Ledyard, and Peter C. Ordeshook. "Nonvoting and the Existence of Equilibrium Under Majority Rule." Journal of Economic Theory 4 (1972): 144-153.

Coughlin, Peter C., and Shmuel Nitzan. "Electoral Outcomes with Probabilistic Voting and Nash Social Welfare Maxima." Journal of Public Economics 15 (1981): 113-121.

13b (optional) Structure-induced equilibrium models

*PT. Section 2.3.2.

Shepsle, K. A. "Institutional Arrangements and Equilibrium in Multi-dimensional Voting Models." American Journal of Political Science 23 (1979): 27-59.

14 Supermajority rules

*PT. Section 5.3.

*Caplin, Andrew, and Barry Nalebuff. "On 64%-Majority Rule." Econometrica 56 (1988): 787-814.

VI. Vote-buying, vote-trading, and resource allocation
15 Vote-buying, vote-trading in legislatures

*Schwartz, Thomas. "The Universal-Instability Theorem." Public Choice 37, no. 3 (1982): 487-501.

*Groseclose, Timothy, and James M. Snyder, Jr. "Buying Supermajorities." American Political Science Review 90 (1996): 303-315.

Snyder, James M., Jr. "Resource Allocation in Multiparty Elections." American Journal of Political Science 34 (1990): 59-73.

16 Probabilistic voting models

*PT. Sections 2.3.2, 3.4, 7.1, 7.4, and chapter 8.

Lindbeck, Assar, and Jorgen W. Weibull. "Balanced-Budget Redistribution as the Outcome of Political Competition." Public Choice 52, no. 3 (1987): 273-297.

*Dixit, Avinash, and John Londregan. "Redistributive Politics and Economic Efficiency." American Political Science Review 89 (1995): 856-866.

———. "The Determinants of Success of Special Interests in Redistributive Politics." Journal of Politics 58 (1996): 1132-1155.

16a (optional) "Colonel Blotto" models - cultivating minorities

Myerson, Roger B. "Incentives to Cultivate Favored Minorities Under Alternative Electoral Systems." American Political Science Review 87 (1993): 856-869.

Lizzeri, Alessandro, and Nicola Persico. "The Provision of Public Goods under Alternative Electoral Incentives." American Economic Review 91, no. 1 (2001): 225-239.

VII. Interest groups and lobbying
17-19 Interest groups and lobbying

*PT. Sections 3.5, 7.3, and 7.5.1.

*Peltzman, Sam. "Toward a More General Theory of Regulation." Journal of Law and Economics 19, no. 2 (1976): 211-240.

Becker, Gary S. "A Theory of Competition Among Pressure Groups for Political Influence." Quarterly Journal of Economics 98 (1983): 371-400.

*Grossman, Gene M., and Elhanan Helpman. "Protection for Sale." American Economic Review 84 (1994): 833-850.

———. "Electoral Competition and Special Interest Politics." Review of Economic Studies 63 (1996): 265-286.

Dixit, Avinash, Gene M. Grossman, and Elhanan Helpman. "Common Agency and Coordination: General Theory and Application to Government Policy Making." Journal of Political Economy 105 (1997): 752-769.

Hirshleifer, Jack. "The Paradox of Power." Economics and Politics 3 (1991): 177-200.

Lohmann, Suzanne. "Information, Access, and Contributions: A Signaling Model of Lobbying." Public Choice 85, no. 3-4 (1995): 267-284.

*Hall, Richard L., and Alan V. Deardorff. "Lobbying as Legislative Subsidy." American Political Science Review 100, no. 1 (2006): 69-84.

Chamon, Marcos, and Ethan Kaplin. "The Iceberg Theory of Campaign Contributions: Political Threats and Interest Group Behavior." Unpublished paper, April 2007. (This resource may not render correctly in a screen reader.PDF)

VIII. Legislatures
20 Bargaining in legislatures

*PT. Sections 5.4 and 7.2.

*Baron, David P., and John Ferejohn. "Bargaining in Legislatures." American Political Science Review 83 (1989): 1181-1206.

*Snyder, James M., Michael M. Ting, and Stephen Ansolabehere. "Legislative Bargaining Under Weighted Voting." American Economic Review 95, no. 4 (2005): 981-1004.

———. "Bargaining in Bicameral Legislatures: When and Why Does Malapportionment Matter?" American Political Science Review 97, no. 3 (2003): 471-481.

Jackson, Matthew O., and Boaz Moselle. "Coalition and Party Formation in a Legislative Voting Game." Journal of Economic Theory 103, no. 1 (2002): 49-87.

21 Coalitions, policies, and government stability

*PT. Sections 7.5.2, 7.5.3, and 10.

Weingast, Barry R., and William J. Marshall. "The Industrial Organization of Congress; or, Why Legislatures, Like Firms, Are Not Organized as Markets." Journal of Political Economy 96, no. 1 (1988): 132-163.

Austen-Smith, David, and Jeffrey S. Banks. "Elections, Coalitions, and Legislative Outcomes." American Political Science Review 82 (1988): 405-422.

Laver, Michael, and Kenneth A. Shepsle. "Coalitions and Cabinet Government." American Political Science Review 84 (1990): 873-890.

Baron, David P. "Government Formation and Endogenous Parties." American Political Science Review 87 (1993): 34-47.

*Diermeier, Daniel, and Timothy J. Feddersen. "Cohesion in Legislatures and the Vote of Confidence Procedure on Legislative Bargaining." American Political Science Review 92, no. 3: 611-621.

Baron, David P. "Comparative Dynamics of Parliamentary Governments." American Political Science Review 92, no. 3 (1998): 593-610.

22 Informational vs. distributive theories of legislature

Shepsle, Kenneth A., and Barry R. Weingast. "The Institutional Foundations of Committee Power." American Political Science Review 81, no. 1 (1987): 85-104.

Gilligan, Thomas W., and Keith Krehbiel. "Organization of Informative Committees by a Rational Legislature." American Journal of Political Science 34 (1990): 531-564.

Ferejohn, John, and Keith Krehbiel. "The Budget Process and the Size of the Budget." American Journal of Political Science 31 (1987): 296-320.

IX. Legislative-executive relations
22a (optional) Legislative-executive relations

*PT. Section 9.1.

Miller, Gary J., and Terry M. Moe. "Bureaucrats, Legislators and the Size of Government." American Political Science Review 77 (1983): 297-322.

*Banks, Jeffrey S. "Agency Budgets, Cost Information, and Auditing." American Journal of Political Science 33 (1989): 670-699.

*Dixit, Avinash. "Power of Incentives in Private versus Public Organizations." American Economic Review 87 (1997): 378-382. (Papers and Proceedings)

McCarty, Nolan M. "Presidential Pork: Executive Veto Power and Distributive Politics." American Political Science Review 94, no. 1 (2000): 117-129.

X. Representative vs. direct democracy
22b (optional) Representative vs. direct democracy

Schultz, Christian. "Information, Polarization and Accountability in Democracy." Unpublished paper, April 2004. (This resource may not render correctly in a screen reader.PDF)

*Maskin, Eric, and Jean Tirole. "The Politician and the Judge: Accountability in Government." American Economic Review 94, no. 4 (2004): 1034-1054.

Alesina, Alberto, and Guido Tabellini. "Bureaucrats or Politicians?" NBER Working Paper No. 10241, January 2004.