In this dissertation I study characteristics of democratic political institutions that yield compromise among conflicting political actors. In Chapter 1 my co-author, Zaki Zahran, and I ask "What prevents majorities from extracting surplus from minorities in legislatures?" We study an infinite horizon game where a legislative body votes to determine distributive policy each period. Proposals accepted by a simple majority are implemented, otherwise the status quo allocation prevails. We construct symmetric Markov perfect equilibria that exhibit compromise in the following sense: if the initial status quo allocation is "not too unequal", then the Markov process is absorbed into allocations in which more than a minimum winning majority receives a positive share of the social surplus. The compromise is only sustainable if, starting from the "unequal" allocations, the Markov process is absorbed into allocations in which there is a complete absence of compromise. These compromise equilibria exist when discounting is neither too small nor too large. We find that, contrary to intuition, the range of discount factors for which these equilibria exist increases as the number of legislators increases. In this sense, compromise is easier in larger legislatures.
In Chapter 2 I explore the impact of some aspects of the WTO on the ability of legislatures to reach free trade outcomes. Tariff bindings and administered protection are two characteristics of the WTO that are little understood. Tariff bindings place a ceiling on tariffs that is not always reached, while administered protection ensures that all sectors have access to some minimum import protection, effectively creating a floor for protection. How do these policies affect applied MFN tariff rates that are enacted through the legislature? More specifically, can these policies embolden legislatures to enact lower applied tariffs? I address this question using a model of tariffs determined by a dynamic legislative process. I show existence of a set of symmetric Markov perfect equilibria in which a low level of protection is a possible outcome, and show that it is more difficult to achieve this outcome with tariff bindings and easier to achieve with administered protection, than it is under purely legislated protection.
|School Location:||United States -- District of Columbia|
|Source:||DAI-A 69/12, Dissertation Abstracts International|
|Subjects:||Economics, Economic theory, Public administration|
|Keywords:||Compromise, Dynamic, International trade, Markov perfect, Markov perfect equilibrium, Political economy|
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