Antitrust actions and the budgeting process

The author expresses appreciation to Dan Benjamin, Charles Knoeber, C.M. Lindsay, M.T. Maloney, William Shughart II, and John Warner for comments and criticisms. The usual caveat applies.     

Public finance in autocratic process: An empirical note

Our title is borrowed in a modified form from that used by Buchanan 1967. All data, as well as the relevant computer print-outs, is available upon request.     

Political systems and distortions: An empirical study

This paper studies empirically why price distortions are more prevalent in some countries than in others. We find no significant difference between democracies and dictatorships, but frequent regime changes reduce distortions. Political systems (factional-subordinate) that encourage redistributive activities (RDA) tend to have more distortions. Allowing for different effects of RDA in democracies and dictatorships, there is a positive and significant effect of RDA on distortions in dictatorships. In democracies, “distortions-destroying” lobbying seems more important since no significant relation between RDA and distortions can be found.     

Electoral promises and minority governments: An empirical study

Abstract.  This article studies the relationship between electoral policy proposals and subsequent government actions in the case of minority governments. Content analysis of electoral pledges of Spanish parties is utilised to study the gains that a relatively small party obtains when it helps to sustain the governing party in office without entering a coalition government. According to the authors' results, cooperating in parliament to maintain the minority government in office can be a rational choice for a party because it allows it to obtain significant gains in terms of programme fulfillment.     

Political participation and procedural utility: An empirical study

Abstract.  Democracy can be characterized by policy outcomes as well as governmental processes. In this article, it is argued that people have preferences about both aspects and that they derive utility from the processes involved in decision making over and above the utility gained from outcomes. The authors study political participation possibilities as an important source of procedural utility. To distinguish between outcome and process utility, they take advantage of the fact that nationals can participate in political decision making, while foreigners are excluded and thus cannot enjoy the respective procedural utility. Utility is assumed to be measurable by individually reported subjective well-being. As an additional indicator for procedural utility, reported belief in political influence is analyzed.     

Industry characteristics and interest group formation: An empirical study

The role of interest groups in the political process has been the subject of much analysis in both political science and economics. However, few studies have examined directly the factors which influence the variation in interest group formation across industrial sectors and between countries. Using data on 75 industrial sectors in 10 countries, we examine the way in which variations in interest group formation are explained by variations in industrial and political characteristics. In cross-sectional empirical relationships we test for the significance of a variety of industry and political variables. Our results indicate that industry characteristics such as the proportion of total demand purchased by households and the concentration ratio are related to variations in interest group formation. We discuss the implications that our results have for recent theoretical work on the effect of interest groups on economic policy.For helpful comments, we would like to thank Antonio Estache, Bruce Gardner, Dennis Mueller, Mancur Olson, and participants at the meetings of the Public Choice Society and the Southern Economic Association. The International Institute of Management of Berlin, Paul Geroski, Neal Kennedy, Alexis Jacquemin, Kenneth Platto, Joachim Schwalbach, and Hideki Yamawaki helped in providing data. The Computer Science Center of the University of Maryland is acknowledged for provision of computational resources.     

Public expenditures in Canadian provinces: An empirical study of politico-economic interactions

It is widely believed that government ideology and electoral constraints are two major factors that influence the level of public expenditures. However, Frey and Schneider argue that the effects of the two phenomena are not simultaneous. Only when a government is popular can it pursue ideological goals, and when popularity is low, energies must be redirected toward gaining support from voters to win the next election. Data draw from the Canadian provincial case are used to test empirically this hypothesis. The findings support the Frey and Schneider explanation.     

After the congressional veto: Assessing the alternatives

Congressional choice of effective replacements for the recently banned legislative veto will require an accurate understanding of the actual results of the now unconstitutional device. The impact of the veto varied strikingly depending on, among other things, the type and target of the veto and on the principal sites of review in Congress itself. No single mechanism will suffice. Rather a variety of devices are available and under consideration. The underlying question raised by this analysis is which effects of the veto are worth perpetuating in light of past results and stated congressional objectives.     

An explanation of the continuing federal government mandate of single-member congressional districts

A formal rational expectation model is developed to explain why congressional single-member districts (SMD’s) were mandated in 1842 and why that mandate has repeatedly been re-affirmed. The tendency of voters to moderate the dominant party in the federal government combined with the single-party sweep effect of multi-member districts (MMD’s) creates the incentives for the strongest party to support a SMD mandate. This model performs empirically much better than alternative theories. The model’s prediction that the current SMD mandate is permanent is an example of how an institutional change can endure even if it no longer reflects voter preferences.     

The two freedoms,economic growth and development: An empirical study

Log-linear methods are applied to categorical data containing economic freedom, political freedom, the level of income, and the rate of economic growth for a panel of about 100 countries from 1975 to 1992. The main results are: given economic freedom, the rate of economic growth is independent of political freedom and the level of income; given the level of income, political freedom is independent of economic freedom and the growth rate. The analysis suggests the fundamental effects of economic freedom in fostering economic growth, and a high level of income as the condition of a high degree of political freedom.     

Expectations for the 1982 mid-term U.S. congressional elections: An historical perspective

The record of U.S. mid-term elections since the mid-1940s is examined. The author explores the relationship of their results to those in the preceding Presidential year. Differential turnout does not seem to affect the outcome. Presidential popularity matters less than expected. But change in disposable income goes far to explain the scale of the electoral changes recorded. Party loyalty matters less for chances of re-election than mere incumbency. In 1982 reapportionment will help the Republicans but President Reagan's unpopularity will hurt them.     

The contractual nature of budgeting: A transaction cost perspective on the design of budgeting institutions

Viewing budgets as contracts, transaction cost theory focuses on the costs of negotiating and enforcing the myriad political agreements by which policymakers allocate the government's resources. This essay provides an overview of transaction cost theory and its implications for the design of budgeting institutions. It contrasts the behavioral premises (bounded rationality and opportunism) of the transaction cost approach with those of more traditional budgetary theories, and examines whether commitment and agency costs have structured budget actors' institutional choices. Investigation of the usage of key budget instruments- entitlements, multi-year appropriations, and tax expenditures - suggests that Congress has been more discriminating in its institutional choices than is commonly supposed. Sensitivity to the importance of transaction costs would increase the effectiveness of budget reforms.     

Technology,behavior, and safety: An empirical study of automobile occupant-protection regulation

Technology and human behavior can influence the effectiveness of safety policies. In the field of traffic safety, rational-choice theorists postulate that automobile safety devices induce increased driver risk taking. Such behavioral responses could partly or totally nullify the lifesaving potential of governmental safety rules for new cars, such as the crashworthiness standards adopted by the United States in the late 1960s and early 1970s. This study explores the behavioral-response hypothesis in the context of a car-vintage model of U.S. car occupant death rates. Results from the model imply that U.S. standards have reduced the occupant death rate by roughly 30 percent, a finding consistent with minimal driver response to safety devices. The study provides support for the technological approach to safety policy and suggests that policymakers might consider adopting additional crashworthiness regulations, such as some form of passive-restraint program.Financial support was provided by the Economic Studies Program, Brookings Institution. I thank Robert W. Crandall, Steven Garber, Lawrence Summers, and the editors for comments. All views and residual errors are solely my responsibility.     

An empirical study of the consolidation of local public health services in Connecticut

This study contributes to the literature by empirically examining the decision of Connecticut communities to consolidate the delivery of public health services. As theory suggests, the prospect of scale economies is found empirically to increase the likelihood that a community consolidates public health services. In addition, differences across communities are found to inhibit the consolidation of public health services. Overall, the results imply that financial incentives may be necessary to encourage more regional districts because localities may underestimate the true minimum efficient scale for public health services and because heterogeneity among jurisdictions impedes regional cooperation.     

Rent-seeking and the behavior of regulators: An empirical analysis

The main contribution of this paper is to describe empirically how the rent-seeking process takes place in a regulated industry through the consistency in Board decisions. Evidence provided by discrete-choice decision models of regulators confirms that the conventional rent-seeking view of regulation is correct, namely to distribute wealth between various groups differently from what market forces would do. First of all, the structure of the rent-seeking activities in the Quebec regulated trucking industry is well explained. There exist behavioral uniformities (Russell and Shelton, 1974) in decisions taken by the Quebec Transport Commission, given its wide range of choice provided by the absence of detailed regulatory standards by the Quebec legislature. Secondly, trucking firms and large shippers are the interest groups seeking to extract artificially contrived rents. The capture theory of regulation is not a dominant political strategy and therefore does not analytically explain various trades taking place among interest groups when a permit authority is requested. So logrolling by regulators is clearly essential to maintain their non-transferable investment of time and talent and protect their political afterlife. Thirdly, large firms are more successful, at the margin, than small firms in their expansion because of their political effectiveness. The regulatory agency gives more rents to those who offer relatively strong electoral support to its party. Finally, appointed regulators do not achieve other positive payoffs from the regulatory process than those which may result from the agency problem. So the regulatory agency does not promote its own policy agenda, but rather that of the elected politicians, given the organizational and control problem between these two.I am indebted to the Social Sciences and Humanities Research Council of Canada for its financial support, to Gérard Bélanger, Jean-Luc Migué for helpful comments and to Sylvain Veillette, Pascal Migué, Marc Leduc for valuable research assistance. I benefitted from useful comments by the editor of this journal. All the remaining errors are mine.     

Identifying neighborhood thresholds: An empirical exploration

Abstract

In this article, we investigate the threshold‐like effects of four aspects of neighborhood environment: poverty rate, adult nonemployment rate, female headship rate for families with children, and secondary school dropout rate. We used a sample consisting of virtually all census tracts from U.S. metropolitan areas. The relationship between the value of numerous neighborhood indicators in 1980 and subsequent changes in each of the four dimensions of neighborhood quality of family life from 1980 to 1990 was evaluated statistically using a regression model with a spline specification to test for nonlinear, threshold‐like processes.

Stressing the exploratory nature of the study, we find evidence of threshold‐like effects in an endodynamic relationship (poverty rate and subsequent changes in that rate), and in exodynamic relationships (occupational status and rental rates and subsequent changes in several neighborhood quality indicators). Implications for research and a spatially targeted neighborhood reinvestment policy are derived from the analysis.     

Budget-maximizing governmental agencies: An empirical test

Niskanen's theory of government budgeting, involving powerful agencies interested in maximizing their budgets through bargaining with a weak, poorly informed governmental ‘Sponsor’, has received wide recognition. This paper presents the first direct empirical tests of Niskanen's ideas. One implication of Niskanen's model of budgeting is that the demand for public services will appear to be elastic. Niskanen's model also implies restrictions on the elasticity of the derived demand for labor in the public sector. Neither set of predictions is supported by existing empirical research on government activity.