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Democracies and Inefficiency

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  • S. A. Baba

Abstract

A government‐interest group model is presented. Voters are neither always rationally ignorant nor always fully informed. Voters' information is variable. Unlike other models that assume a vote production function, this model considers the voter's utility and shows how rational voters with limited information can sometimes vote for inefficient policies. If voters can be informed inexpensively, then democracies are efficient. If the cost of informing voters is prohibitive, then pressure groups efficiently extract rent. If the cost of informing voters is low for efficient direct handouts, but high for inefficient policies, then inefficient redistributions will occur.

Suggested Citation

  • S. A. Baba, 1997. "Democracies and Inefficiency," Economics and Politics, Wiley Blackwell, vol. 9(2), pages 99-114, July.
    • Handle: RePEc:bla:ecopol:v:9:y:1997:i:2:p:99-114
    DOI: 10.1111/1468-0343.00023
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    Cited by:

    1. Mahdi Ghodsi, 2023. "Salmonella Program in the European Union and the Trade Dispute with Brazil at the World Trade Organisation: a Partial Equilibrium Framework," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 131(1), pages 167-212.
    2. Aidt, Toke Skovsgaard, 2003. "Redistribution and deadweight cost: the role of political competition," European Journal of Political Economy, Elsevier, vol. 19(2), pages 205-226, June.
    3. Nedra Baklouti & Younes Boujelbene, 2018. "The Nexus Between Democracy and Economic Growth: Evidence from Dynamic Simultaneous-Equations Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 980-998, September.
    4. Mahdi Ghodsi, 2015. "Distinguishing Between Genuine and Non-Genuine Reasons for Imposing Technical Barriers to Trade: A Proposal Based on Cost-Benefit Analysis," wiiw Working Papers 117, The Vienna Institute for International Economic Studies, wiiw.
    5. Jeffrey Edwards & Frank Thames, 2010. "Growth volatility and the interaction between economic and political development," Empirical Economics, Springer, vol. 39(1), pages 183-201, August.
    6. Witold Jerzy Henisz, 2004. "Political Institutions and Policy Volatility," Economics and Politics, Wiley Blackwell, vol. 16(1), pages 1-27, March.
    7. Lawton Lanier Nalley & Andrew Barkley, 2005. "Political Freedom, Economic Freedom, and Prosperity: International Trade Policy as a Measure of Economic Freedom," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 21(Fall 2005), pages 123-141.
    8. Iqbal, Nasir & Khan, Sardar Javaid Iqbal & Irfan, Muhammad, 2008. "Democracy, Autocracy and Macroeconomic Performance in Pakistan," MPRA Paper 28122, University Library of Munich, Germany.
    9. T Renee Bowen & Cecilia Hyunjung Mo, 2016. "The voter’s blunt tool," Journal of Theoretical Politics, , vol. 28(4), pages 655-677, October.
    10. Payam Elhami & Mahdi Ghodsi & Robert Stehrer, 2021. "Quality of Goods Imports: Which Role for Non-tariff Measures?," wiiw Policy Notes 46, The Vienna Institute for International Economic Studies, wiiw.

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