《《Legislative Bargaining and the Dynamics of Public Investment0a》.pdf

American Political Science Review Vol. 106, No. 2 May 2012 doi:10.1017/S0003055412000160 Legislative Bargaining and the Dynamics of Public Investment MARCO BATTAGLINI Princeton University SALVATORE NUNNARI and THOMAS R. PALFREY California Institute of Technology e present a legislative bargaining model of the provision of a durable public good over an infinite horizon. In each period, there is a societal endowment that can either be invested in the public good or consumed. We characterize the optimal public policy, defined by the time path W of investment and consumption. In a legislature representatives of each of n districts bargain over the current period’s endowment for investment in the public good and transfers to each district. We analyze the Markov perfect equilibrium under different voting q-rules where q is the number of yes votes required for passage. We show that the efficiency of the public policy is increasing in q because higher q leads to higher investment in the public good and less pork. We examine the theoretical equilibrium predictions by conducting a laboratory experiment with five-person committees that compares three alternative voting rules: unanimity (q = 5), majority (q = 3), and dictatorship (q = 1). central role of government is the provision The debate on the policy consequences of differ- Aof public goods to its citizenry. Most public ent voting rules has important practical implications, goods provided by governments are durable, because we observe a large variety of voting rules in and hence dynamic in nat