Berliant, Marcus and Tabuchi, Takatoshi (2011): Local politics and economic geography.
Download (270kB) | Preview
We consider information aggregation in national and local elections when voters are mobile and might sort themselves into local districts. Using a standard model of private information for voters in elections in combination with a New Economic Geography model, agglomeration occurs for economic reasons whereas voter stratification occurs due to political preferences. We compare a national election, where full information equivalence is attained, with local elections in a three district model. A stable equilibrium accounting for both the economic and political sectors is shown to exist. Restricting to an example, we show that full information equivalence holds in only one of the three districts when transportation cost is low. The important comparative static is that full information equivalence is a casualty of free trade. When trade is more costly, people tend to agglomerate for economic reasons, resulting in full information equivalence in the political sector. Under free trade, people sort themselves into districts, most of which are polarized, resulting in no full information equivalence in these districts. We examine the implications of the model using data on corruption in the legislature of the state of Alabama and in the Japanese Diet.
|Item Type:||MPRA Paper|
|Original Title:||Local politics and economic geography|
|Keywords:||information aggregation in elections; informative voting; new economic geography; local politics|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information; Mechanism Design
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity
|Depositing User:||Marcus Berliant|
|Date Deposited:||03. Dec 2011 22:14|
|Last Modified:||02. Apr 2014 00:06|
Ago, T., I. Isono and T. Tabuchi, 2006. "Locational Disadvantage of the Hub." Annals of Regional Science 40, 819-848.
Austen-Smith, D. and J.S. Banks, 1996. "Information Aggregation, Rationality and the Condorcet Jury Theorem." American Political Science Review 90, 34-45.
Brügger, B., R. Lalive and J. Zweimüller, 2009. "Does Culture Affect Unemployment? Evidence from the Röstigraben." CESifo Working Paper No. 2714.
Bosker, M., S. Brakman, H. Garretsen and M. Schramm, 2010. "Adding Geography to the New Economic Geography: Bridging the Gap between Theory and Empirics." Journal of Economic Geography 10, 793--823.
Couch, J.F., K.E. Atkinson and W.F. Shughart, 1992. "Ethics Laws and the Outside Earnings of Politicians: The Case of Alabama's "Legislator-Educators"." Public Choice 73, 135-45.
Davis, D.R., 1998. "The Home Market, Trade, and Industrial Structure." American Economic Review 88, 1264-1276.
Epple, D. and G.J. Platt, 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Income." Journal of Urban Economics 43, 23-51.
Feddersen, T. and W. Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections with Private Information." Econometrica 65, 1029-1058.
Hildenbrand, W., 1974. Core and Equilibria of a Large Economy. Princeton: Princeton University Press.
Krugman, P., 1991. "Increasing Returns and Economic Geography." Journal of Political Economy 99, 483-499.
Maug, E. and B. Yilmaz, 2002. "Two-Class Voting: A Mechanism for Conflict Resolution." American Economic Review 92, 1448--1471.
Tabuchi, T. and D.-Z. Zeng, 2004. "Stability of Spatial Equilibrium." Journal of Regional Science 44, 641-660.