1. What is logrolling? Under what conditions is logrolling likely to emerge? How can logrolling prevent the attainment of efficiency?
2. Show how an increase in the average cost of supplying a pure public good will reduce the output resulting from simple majority rule. Is the median voter always the same person? Show how a change in tax shares could change the identity of the median voter.
3. Explain in your own words the inherent problem of government waste identified by William Niskancn. If this spericling is for services used by the public, why would Niskancn nevertheless label it wasteful? Subsequently, create a counter-example where competition among different government agencies eliminates this problem, Why are Niskanen's concerns with waste disappearing under competing government agency proposals?
Americans pay higher grocery prices due to higher tariffs on imported sugar_ the only supporters of sugar tariffs are U.S. sugar growers and other U.S.-based makers of sweetening products_ Why do US, voters allow a tariff system that causes the majority (consu-mers) to be made worse off with higher grocery prices?
PROBLEMS
The average cost of landscaping services for members of a condominium community is $350 per week. As some that the quantity of landscaping services is perfectly correlated with the number of gardeners per week. Suppose the community consists of seven residents, each with the identical marginal benefit curve for landscaping services. The marginal benefit of the first gardener is $100 per Resident,.
a. How many gardeners would he hired if their ser-vices were sold in a market to individual buyers at a price of $350 per week? Explain why the market arrangement is inefficient.
b. Assume that the efficient number of gardeners is three per week_ What is the political equilibrium under majority rule if each voter is assigned a tax share of $50 per gardener per week? Does the political equilibrium under majority rule differ from the Lindale equilibrium?
2. Instead of all residents having identical marginal benefit schedules, the marginal benefit per gardener varies for five residents according to the following table:
|
VOTER
|
1
|
2
|
3
|
4
|
|
MIKE
|
325
|
275
|
225
|
175
|
|
JAN
|
225
|
150
|
75
|
0
|
|
FRANKLIN
|
75
|
50
|
25
|
0
|
|
SUSAN
|
75
|
50
|
25
|
0
|
|
MEGAN
|
50
|
0
|
0
|
0
|
If each voter is assigned a tax share of $50, what is the political equilibrium under majority rale? Show that this equilibrium does not result in the efficient output of gardening services. Show how the LincLahl equilibrium will differ from the political equilibrium under majority rule..15 3.
3. The example of logrolling used in the text assumes that the transactions costs of vote trading are zero. Suppose instead that voters A and C have to incur expenditures equal to $60 per week to reach agreement on the vote-trading scheme. Show how this would prevent successful logrolling. Also show how logrolling would be impossible if the marginal benefit of the first security guard were only $150 to voter A and transactions costs were zero.
4. Suppose the positions of political candidates on all is-sues can be ranked on a scale of conservative to liberal. The more conservative a candidate, the less the quantity of public goods he will supply. Suppose as well that all voters favoring liberal candidates will vote while only 50 percent of those favoring conservative candidates will vote, Use a graph like the one drawn in Figure 5.6 to show how the political equilibrium will differ from an election in. which all citizens vote.
5. Suppose the military bureaucracy consistently misinforms Congress on the total costs of producing mili-tary hardware. Assume that it unclern timates the actual costs and that the political representatives be-lieve these estimates. Show how this is likely to cause a loss in efficiency. Show the efficient output of mili-tary hardware, the output desired by the military bureaucracy, and how the output chosen will differ from bted to Michael Wenrz of Salisbury University for this problem and for proving clarification on the firal problem in this chapter.