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Article
Inefficient public provision in a repeated elections model
Journal of Public Economic Theory (2007)
  • Georges Casamatta, Toulouse School of Economics
  • Caroline De Paoli, Toulouse School of Economics
Abstract

We extend the model of Schultz (1996) to a dynamic setting with no policy commitment. Two parties that compete for election must choose the level of provision of a public good as well as the tax payment needed to finance it. The cost of producing the good may be high or low and this information is not known to the voters. We show that there exists an equilibrium in which the party that does not want much of the public good uses the inefficient (high cost) technology even though the efficient one is available. Using the low cost technology would, by informing the voters about the cost parameter, force it to produce an excessively high level of the good in the future. Interestingly, this equilibrium is not symmetric, suggesting that a party with a strong taste for the public good is less likely to adopt a wasteful policy.

Keywords
  • asymmetric information,
  • commitment,
  • dynamic electoral competition,
  • ratchet effect
Disciplines
Publication Date
2007
Citation Information
Georges Casamatta and Caroline De Paoli. "Inefficient public provision in a repeated elections model" Journal of Public Economic Theory Vol. 9 Iss. 6 (2007)
Available at: http://works.bepress.com/georges_casamatta/10/