DP4808 Bundling and the Unanimity Rule
|Author(s):||Ulrich Erlenmaier, Hans Gersbach|
|Publication Date:||December 2004|
|Keyword(s):||amendment rules, bundling, constitutions, provision of public projects, unanimity rule|
|JEL(s):||D62, D70, H40|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=4808|
In this Paper, we design democratic constitutions that can transcend the shortcomings of the unanimity rule. The constitution embeds the unanimity rule in a set of virtue-supporting principles: (a) broad packages with many public projects (bundling) are allowed, but can only be proposed once in a legislative term; (b) the person who designs the package is also taxed at the highest proposed rate; and (c) subsidies are forbidden. We show that such democratic constitutions can yield efficient public project provision.