Side payments, Public Economics

3 voters, A, B, and C, will decide by majority rule whether to pass bills on issues X and Y. Every of the two issues will be voted on indiviually. The change in net profits (in dollars) that would result from the passage of every bill is as follows:

                                                            Issue
           Voter                                    X                Y
              A                                     +6               -3                                    
              B                                     -1              +4
              C                                     -2               -3


1.    Which issues (if any) will pass if decided by majority rule? Is this the efficient outcome? And another question is which issues (if any) would pass if logrolling were permitted? Would logrolling improve efficiency? Would it result in the efficient outcome?

2.    Assume that it were legal for one voter to pay another voter to vote in a some way. Would permitting such side payments improve efficiency in part b? Would it result in the efficient outcome?

3.    What amount of side payments would take place if paying for votes were permitted?

Posted Date: 3/21/2013 1:39:42 AM | Location : United States







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