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Title: Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs

Author(s): Hans Gersbach

Publication Date: April 2005

Keyword(s): democratic constitutions, double majority rules, flexible agenda cost rules and unobservable utilities

Programme Area(s): Public Economics

Abstract: We develop democratic mechanisms where individual utilities are not observable by other people at the legislative stage. We show that an appropriate combination of three rules can yield efficient provision of public projects: first, flexible and double majority rules where the size of the majority depends on the proposal and verifiable parameters and taxed and non-taxed individuals need to support the proposal; second, flexible agenda costs where the agenda-setter has to pay a certain amount of money if his proposal does not generate enough supporting votes; third, a ban on subsidies. We provide a rationale why double majority rules are used in practice. We also show that higher degrees of uncertainty about project parameters can make it easier to achieve first-best allocations and that universal equal treatment with regard to taxation is undesirable.

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Bibliographic Reference

Gersbach, H. 2005. 'Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5013