Interest Groups, Referenda, and the Political Process: On the Efficiency of Direct Democracy

We argue that the institutionalization of direct democratic elements in a constitution will tend to enhance the efficiency of an economy. In a model of direct democracy it is shown that--contrary to the political process in a representative democracy--efficient projects will always be politically ac...

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Veröffentlicht in:Constitutional political economy 2000-06, Vol.11 (2), p.147-163
Hauptverfasser: Zimmermann, Klaus, Just, Tobias
Format: Artikel
Sprache:eng
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Zusammenfassung:We argue that the institutionalization of direct democratic elements in a constitution will tend to enhance the efficiency of an economy. In a model of direct democracy it is shown that--contrary to the political process in a representative democracy--efficient projects will always be politically accepted and the degree of inefficiency of inefficient projects will be reduced. These effects stem from a more intense competition among small interest groups and the pressure to improve the cost-benefit ratio of a project. Furthermore, 'contestable decision markets,' that is the co-existence of direct and indirect forms of democracy, will always work in favor of higher efficiency. [PUBLICATION ABSTRACT]
ISSN:1043-4062
1572-9966
DOI:10.1023/A:1009081600350