Electoral competition and the welfare state

The article investigates how parties compete over the welfare state by emphasising specific welfare state issues. The core argument is that two issue-specific factors determine how much parties emphasise individual welfare state issues: the character of policy problems related to the policy issues and the type of social risks involved. To test the argument, a new large-N dataset is employed, with election manifestos from Belgium, Denmark, France, Germany, the Netherlands, Sweden, and the United Kingdom. The dataset contains information on how much parties have talked about health care, education, and labour market protection in national elections since 1980. With the data at hand, it is possible to provide the first systematic investigation of how parties compete for votes over the welfare state. The approach here is able to explain the empirical fact that health care is consistently receiving increased attention everywhere, while particularly labour market protection has witnessed a decline in attention.     

Understanding the role of technology in reducing corruption: a transaction cost approach

Prior research suggests that computerization of government services can help reduce corruption involved in government transactions, but there is no clear understanding of the process through which computer‐mediated transactions reduce corruption. We attempt to fill this gap by using a transaction cost economics framework, and argue that uncertainty and asset specificity associated with government transactions allow bureaucrats to act opportunistically and demand bribes. Therefore, those computerization initiatives that reduce uncertainty and asset specificity of government services lead to lowered perceptions of corruption. Our findings, based on a survey of 101 managers of domestic and multinational enterprises in India, support our hypotheses. We also compare the websites of Indian government organizations with European government websites on the dimensions of transparency and interactivity, and find that the Indian websites do not provide as much interactivity as the European websites. Our multi‐method study offers important theoretical and practical insights on effectively using technology to reduce corruption. Copyright © 2015 John Wiley & Sons, Ltd.     

Policy and regulatory design for developing countries: a mechanism design and transaction cost approach

The first-generation literature on policy design has made considerable contributions over the last 30 years to our understanding of the process, politics and implications of policy design and instrument choice. This literature, however, has generally treated institutions as a black box and has not developed a coherent set of frameworks, theories and models of how institutions matter to policy design. In this paper, I unpack the black box of institutions using transaction cost and mechanism design to show how regulations can be better designed in developing countries when institutions are weak, unaccountable, corrupted or not credible. Under these conditions, I show that efficient regulatory design has to minimize transaction costs, particularly agency problems, by having incentive compatible (self-enforcing) mechanisms. I conclude with a second-generation research agenda on regulatory design with implications for environmental, food and drug safety, healthcare and financial regulation in developing countries.     

Managing contract performance: A transaction costs approach

Managing contracts is a complex process, often exacerbated by high transaction costs inherent in negotiating, implementing, and monitoring contract relationships with vendors. Through analyses of data from a 1997 International City/County Management Association survey of municipal and county governments, the way in which municipal and county governments respond to transaction cost factors inherent in contract service delivery is examined. The results of the analyses demonstrate that when governments contract for services in contexts that risk contract failure, they engage in a variety of monitoring techniques to improve their ability to monitor and correct vendor performance. © 2003 by the Association for Public Policy Analysis and Management.     

The problem of regulatory arbitrage: A transaction cost economics perspective

Regulatory arbitrage, or the ability of financial firms to circumvent or neutralize rules, is a classic problem of financial regulation. This article draws on transaction cost economics (TCE) to reformulate this old problem, thus defining regulatory arbitrage as a contracting hazard arising from interactions between the regulator and regulated firms, given bounded rationality and opportunism. Following standard TCE, the article first characterizes the implicit regulatory contract in finance, focusing in particular on the mobile and elastic nature of regulated actors and financial assets as well as the contested utility of financial innovation. It is then argued that this incomplete and hazard-prone regulatory bargain must be matched with a governance structure that both adapts to unforeseen circumstances and avoidance strategies and copes with radical uncertainty about the welfare consequences of financial innovation. To that end, the article discusses how a governance structure here termed “relational regulation” might facilitate such ex post governance under uncertainty.     

Setting the agenda: Electoral competition,commitment of policy,and issue salience

By committing policy, an incumbent in effect disowns an issue; when she maintains policy flexibility, the issue remains electorally salient. Electoral competition shapes political commitment decisions and collapses the multi-dimensional issue space into a low-dimensional space of electorally salient issues.     

Recalibrating social protection: Electoral competition and the new partisan politics of the welfare state

This article investigates the new party politics of welfare states with a particular focus on electoral competition. The argument is that welfare state politics are no longer just about more or less, but involve trade-offs among ‘new’ versus ‘old’ social rights, and hence social investment versus social consumption. However, party priorities on these issues are highly dependent upon their electoral situation. As electoral competition becomes more intense, parties focus more on vote maximisation than on their traditional policy goals. For left parties, this means focusing more on social investment, which appeals to their growing constituency of progressive sociocultural professionals, and less on defending the traditional income maintenance programmes favoured by their core blue-collar voters. Centre-right parties, on the other hand, should hesitate to retrench old social rights when electoral competition intensifies because they need to prioritise their appeal to culturally conservative working-class voters over their traditional fiscally conservative policy profiles. Using a new dataset and a recently published measure of electoral competitiveness, the article shows that as electoral competition intensifies, left governments are willing to prioritise social investment by reducing pension rights generosity in order to expand programmes for new social risks, while centre-right governments by contrast avoid retrenchment of pension rights and pension expenditures. The findings demonstrate that this relationship is moderated by the presence of a credible radical right challenger, which increases the electoral risk of welfare state recalibration.     

Keeping the other candidate guessing: Electoral competition when preferences are private information

We analyze a, model of two candidate competition in which candidate and voter preferences are private information. If candidates simultaneously commit to policy platforms the uncertainty about candidate preferences reinforces the incentive for platform divergence. After a candidate observes the other candidate’s stance but before she learns about voter preferences she may face regret about her choice. This ex post irrationality suggests that a 1 period model may not capture the relevant incentives. In a multi-period proposal game in which candidates first make non-binding public proposals and then they make binding public proposals (similar to Ledyard, 1989) we find that candidates are uninformative during the first stage, as they have a disincentive to reveal their preferences to the opposing candidate. This finding offers an explanation for candidate ambiguity or inconsistency early in an election which does not involve efforts to deceive voters. Candidates may be trying to keep their opponent guessing. With a strong pre-election commitment technology, candidates can only be deterred from this type of behavior if they anticipate that a sizeable number of voters (more than a majority) will vote contrary to their preferences over policy.     

Issue competition in the 1993 Norwegian national election

Public Choice - We investigate the role of issues in the 1993 Norwegian election. We are interested in comparing two spatial models of issue evaluation, the directional model and the familiar...     

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.     

Candidate competition and strategic coordination: evidence from four early Norwegian elections

This article investigates strategic coordination in four elections to the Norwegian Storting (1909–18). The elections were held under a majority-plurality dual-ballot system, with unrestricted participation in the second-ballot. The focus is on elections with Conservative, Liberal and Labour candidates as main contenders. Supported by historical and theoretical arguments, the authors assume universally sincere voting in the first-ballot. Given this assumption, second-ballot elections can be analyzed as regular plurality elections. Hypotheses about behavior are formed using the game theoretic framework of Myerson and Weber (American Political Science Review 87 (1993) 102–114). It is found that while voters follow the predictions of theory fairly closely, the extent of coordination present at the candidate level can be questioned.     

Electoral formulas: A macroscopic perspective

Abstract The paper offers a macroscopic view of the legislative electoral formulas in force in 166 sovereign countries, whether democratic or not. The purpose is to determine which formulas are the most widespread, and whether the prevalence of a formula is correlated with geographical, historical, economic, and political factors. While plurality and PR systems are equally frequent, the former tend to be found in more populated countries. PR prevails in Europe and South America, and among the most democratic countries, while the plurality rule is more typical of Asia, Africa, and North America, and is especially popular among former British colonies. Large countries are more likely to opt for single–member districts. No significant correlation emerges between the level of economic development or French colonial background and any electoral formula. The study suggests that the selection of an electoral system is not merely the outcome of party interest, but is also strongly influenced by ideas about what is good, just, or efficient.     

Electoral formulas: A macroscopic perspective

The paper offers a macroscopic view of the legislative electoral formulas in force in 166 sovereign countries, whether democratic or not. The purpose is to determine which formulas are the most widespread, and whether the prevalence of a formula is correlated with geographical, historical, economic, and political factors. While plurality and PR systems are equally frequent, the former tend to be found in more populated countries. PR prevails in Europe and South America, and among the most democratic countries, while the plurality rule is more typical of Asia, Africa, and North America, and is especially popular among former British colonies. Large countries are more likely to opt for single–member districts. No significant correlation emerges between the level of economic development or French colonial background and any electoral formula. The study suggests that the selection of an electoral system is not merely the outcome of party interest, but is also strongly influenced by ideas about what is good, just, or efficient.     

Electoral reform and the mirror image of inter-party and intra-party competition: The adoption of party lists in Colombia

The Colombian case offers a rare opportunity to observe effects of electoral reform where districting remains constant. Only the formula changed, from extremely ‘personalized’ (seats allocated solely on candidate votes) to ‘listized’: seats are allocated to party lists, which may be either open or closed. Electoral reform has effects on both the inter-party dimension (the number of parties competing) and the intra-party dimension (the extent of competition within parties). Consistent with theoretical expectations, the inter-party dimension features an increased number of parties in the low-magnitude districts and a decrease in the high-magnitude districts. On the intra-party dimension, the impact “mirrors” the inter-party: less competition in smaller districts, yet more in larger districts.     

Recurrent cost and performance comparisons within public administration: A method of generating efficiency-promoting competition

Economists (e.g., Niskanen) usually advocate increased competition in order to increase efficiency within public administration. To bring about competition that promotes efficiency, it is not necessary to oblige the public body (e.g., central government authority, municipal administration) to compete with other producers concerning who is to provide the public service. Such competition can also be generated with the aid of continuous productivity and efficiency comparisons between public bodies which provide similar services.     

Electoral competition and minority alienation in a plurality system: Sri Lanka 1947–77

Till recently, Sri Lanka was distinctive amongst the less developed countries for having a parliamentary democracy based on regular and fair competitive elections. The present article analyses the long-term impact that the plurality system of elections had on the consolidation of political alignments and cleavages in Sri Lanka in its post-independence period. The study finds that the very success of the plurality system in encouraging popular participation, bi-polar competition, political cohesion and stability contributed to engendering their unacceptable extremes in Sri Lanka's resource-scarce context. In the longer run, the increasing radicalization of the electorate, acute party competition for control of the state, ethnic sectarianism, and absolute parliamentary majorities served to undermine the democratic aspects of the system.     

Presidential oversight: Controlling the regulators

In 1974, President Ford initiated a procedure by which the regulatory policies of federal agencies were subjected to systematic oversight. This activity continued with modest success through subsequent administrations. A substantial stiffening of oversight powers under President Reagan raises basic questions about the best means for performing effective oversight. Proposals for a so-called regulatory budget, within which each agency would be obliged to operate, could expand the oversight authority; but it is too exclusively cost-oriented. A more promising approach is to impose expiration dates on regulations, making them subject to renewal, and to reform the legislative mandates of the regulatory agencies.