Balanced-Budget Redistribution as Political Equilibrium
1985 (English)Report (Other academic)
This paper considers balanced-budget redistribution between socioeconomic groups of individuals as the outcome of electoral competition between two political parties. Equilibrium is unique in the present model, and a sufficient condition for existence is given, requiring that there be sufficient "stochastic heterogeneity" with respect to party preferences in the electorate. The validity of Hotelling's "principle of minimum differentiation", as well as of "Director's law", is examined under alternative hypotheses concerning administrative costs and voters' possibilities of "exit" adn "voice" in the election process. The policy strategy of expected-plurality maximization is contrasted with the strategy of maximizing the parobability of gaining a plurality. Incomes are fixed and known, so lump-sum taxation is feasible. However, constraints on tax/transfer differentitation between individuals are permitted in the analysis.
Place, publisher, year, edition, pages
Stockholm: IIES , 1985. , 39 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 341
IdentifiersURN: urn:nbn:se:su:diva-41513OAI: oai:DiVA.org:su-41513DiVA: diva2:330822