Public choice
- Field that emerged in the 1960s with the publication of The Calculus of Consent (Buchanan and Tullock 1962)
- Three driving principles of public choice:
- Rationality postulate
- Methodological individualism
- Politics as exchange
- Contributions of public choice to our understanding:
- Voting
- Bureaucratic behavior
- Theory of regulation
- Dictatorial behavior
- Legislative process (logrolling, agenda setting, industrial organization of congress)
The economics of conflict
- How economics sees conflict
- The dark side of the force: Exchange vs. Conflict
- Why conflict?
- Informational asymmetries
- Transaction costs
- A simple model of conflict:
\(p_i,\ i\in\left\{1,\ 2\right\}\)
\(p_1=1-p_2\)
\(p_1=\frac{n_1}{n_1+n_2},\ p_2=\frac{n_2}{n_1+n_2}\)
Max \(p_i\Theta-cn_i\)
The paradox of revolution
- Tullock (1971), Public Choice. One of the first contributions in the literature on the economics of conflict
Revolution as a collective action problem
- What is a collective action problem?
- The logic of collective (in)action?
- The importance of size, rewards, and side benefits
Tullock's model
- The payoff of the potential participant (siding with revolution):
\(P_r=P_g\cdot\left(L_v+L_i\right)+R_i\left(L_v+L_i\right)-P_i\left[1-\left(L_v+L_i\right)\right]-L_w\cdot I_r+E\)
- See paper for the meaning of symbols
- Note that for large enough groups, \(L_i\simeq0\):
\(P_r\simeq P_gL_v+R_iL_v-P_i\left(1-L_v\right)-L_wI_r+E\)
- Define \(G_r=P_r-P_gL_v\):
\(G_r\simeq R_iL_v-P_i\left(1-L_v\right)-L_wI_r+E\)
Implications of the model
- Public good considerations have mostly a marginal effect on the decision of individuals to participate
- Revolutions are more likely to succeed when individuals expect a larger private benefit from participation. What does this mean historically?
- Why do regimes target minorities?