Larry E. Jones

Public Choice and Voting

• PCV1. “A Reconsideration of the Problem of Social Cost: Free Riders and Monopolists,” with V. V. Chari, Economic Theory , Vol. 16, No. 1, 2000, 1-22.
• PCV2. "The Economics of Split Voting in Representative Democracies," joint with V. V. Chari and R. Marimon, American Economic Review , Vol. 87, No. 5, 1997, 957-976.
• PCV3. "Strategic Delegation in Monetary Unions," joint with V. V. Chari and R. Marimon, The Manchester School , 72 (s1), November 2004, pp 128-150.
• PCV4. “Endogenous Policy Choice: The Case of Pollution and Growth,” (with R. E. Manuelli), Review of Economic Dynamics , 4, 2001, 369-405.

In PCV1, we study the problem of implementing optimal allocations in settings with public goods or externalities. We provide two types of results. First, we show that non-cooperative models of equilibrium in these settings are equivalent to 'complementary monopoly' problems when public goods are present (and 'complementary monopsony' problems with externalities). Second, we extend the results of Roberts and Mailath and Postlewaite to show that for all mechanisms with reasonable properties, the best implementable allocation is the least efficient one among those consistent with individual rationality. This second result is reminiscent of the findings by Cournot in settings of complementary monopoly in keeping with the first result above.

In PCV2, we study models of bargaining over the national budget between Congress and the president in settings in which public expenditures have purely local benefits. We show that in a symmetric setting, the outcome is efficient despite the existence of a budgetary externality. We show that this can bias the setting of other policies like foreign policy, however. Finally, these models can be used to give one simple explanation for the popularity of proposals for term limits. PCV3 takes these ideas and applies them to monetary unions, with applications to the theory of optimal currency areas.