W. Mark Crain

A Test of the Property-Rights Theory of the Firm: Water Utilities in the United States

CONTROVERSY over the relative efficiency of public versus private enterprise has a long history in economic thought. Many of the same issues that concerned Chadwick and Mill in their debates in the 1850s over nationalizing certain British industries and von Mises and Hayek versus Lange and Lerner in their well-known exchanges about the efficacy of a centrally planned economy continue to come up in the literature.1 In fact the modern property rights theory of the firm, postulated by theorists such as Alchian, Becker, and Demsetz follows in the tradition of von Mises and Hayek in stressing the impact on economic efficiency of alternative ownership forms. Special emphasis is placed on cost-reward arrangements within private and public enterprises in this approach to the theory of the firm. Where a direct connection between productivity and reward is severed, as in public enterprises, production will be less economically efficient. While this is a very appealing approach to firm behavior, it is yet to be subjected to a rigorous test with respect to firm costs. De Alessi purports to examine the implication of the property rights theory for managerial tenure.2

Legislative organization and government spending: cross-country evidence

Abstract The “Law of 1/ n ” posits that an increase in the number of elected representatives fuels excessive government spending. Despite its wide acceptance as a stylized fact, the Law of 1/ n has received only limited empirical scrutiny, and the existing evidence for the American States provides mixed support for the thesis. This paper examines the Law of 1/ n in bicameral and unicameral legislative structures using a cross-section of democratic countries. The results indicate that legislative size matters under both legislature structures, but bicameralism dampens the 1/ n effect relative to unicameralism.

The Politics of Infrastructure

A number of recent studies attempt to measure the productivity of public capital. Some estimates indicate that government investments are a potential well-spring for economic progress, while others indicate that public infrastructure has a negligible effect on private sector output. This article investigates political institutions and processes underlying the decisions for public infrastructure spending. We apply the framework of strategic models of fiscal policy and develop an empirical model to analyze the substantial differences in public capital across American states. Institutions such as term limits, citizen initiative, and budgeting procedures were significant determinants of state public capital stocks and the flow of new public investments during the 1980s. The results further suggest that political conditions such as legislative stability and voter volatility are systematically related to infrastructure differences across states.

Time inconsistency and fiscal policy : Empirical analysis of U.S. States, 1969-89

Abstract We offer an extensive and robust test of the time-inconsistency theory of fiscal politics. We employ data of U.S. states from 1969 to 1989, and the results of our tests indicate the variables such as legislative stability and executive term limits have strongly predictable impacts on the volatility of various measures of fiscal policy.

Effects of term limits on fiscal performance: Evidence from democratic nations *

Political reputation models featureforward-looking, rational voters whore-elect incumbents based on their estimateof an incumbents ability level. Fiscalpolicy is one of the ways an incumbentestablishes a reputation and therebysignals this ability level to voters. Thereputation-building framework implies thatterm limits should affect fiscalperformance; a term-limited incumbentplaces less value on reputation-buildingthan an incumbent eligible for re-electiondoes. We examine differences in fiscalperformance in democratic countries underalternative executive term limit regimes. Our results generally agree with the priorfindings of Besley and Case (1995a) whoanalyzed gubernatorial term limits in theAmerican States. We provide new evidencethat the fiscal effects of term limitsdiffer under a two-term rule versus asingle-term rule.

Bicameral Legislatures and Fiscal Policy

Early and modern scholars both presume that bicameral chambers limit the exploitation of minorities by the ruling majority similar to supermajority voting rules. We explain theoretically why bicameralism is a unique and desirable institution for protecting minority interests. The empirical analysis examines the structure of bicameralism in the American States. Using detailed data to proxy voter preferences, we find the degree of constituent homogeneity across chambers to be an important determinant of government expenditures for several budget components. Decreased constituent homogeneity tends to reduce redistributive spending and increase spending on public goods.

The Size and Composition of Government Spending in Multi-Party Systems

This paper explores the structure of party competition across democratic nations and its impact on the size and composition of government spending. The analytical framework expands on the norm of universalism, applies it to multi-party legislatures, and develops several propositions. We examine these propositions empirically using panel data for two samples, OECD countries and a large sample of world countries. The findings for both samples indicate that political fragmentation, usually measured by the number of effective political parties, has a positive relationship with the size of the government, and with subsidies and transfers. The findings also indicate that proportional representation (particularly closed lists proportional voting systems) and parliamentary countries favor higher public expenditures.

Districts, Diversity, and Fiscal Biases: Evidence from the American States

This paper argues that the configuration of legislative districts and not merely the number of districts matters for fiscal performance. District configuration mediates the extent of constituent diversity both across and within districts. Both dimensions of diversity affect the political calculus associated with pork barrel politics. Empirical findings for the American states reveal statistically and quantitatively significant effects of constituent diversity on state government spending. Together the analysis and evidence emphasize the conditional nature of the “Law of l/n.” In the United States, this point acquires practical relevance from the Constitutional mandate for decennial redistricting in all jurisdictions based on geographic representation.

Economics and the architecture of popular music

Abstract A simple supply and demand framework is developed to study the time-series pattern of music. Changes in the internal structure of successful songs, it will be argued, are tied to market forces. An extensive data set has been developed to enable the investigation of a large number of issues in this spirit. The analysis proceeds by first asking a basic question: Has the structure of music changed in these 50 years? We discover major regime changes in the mid 1950s and again in the mid 1960s that generally conform to intuition. The analysis then turns to specify a system of demand and supply equations to explain the patterns in popular music over the sample period.

Televised legislatures : political information, technology and public choice

1 The Architecture of Constitutions.- 2 Political Information Technology and Public Choice: Background.- Voter Shopping: Experience and Search.- Product Advertising and Information Theory.- Product Advertising as Political Advertising.- Technology and the Costs of Campaigning.- The Rational Voter Model.- Televised Legislatures.- History of Televised Legislatures.- Summary.- 3 Legislative Television: The Transformation of Politicians.- The Relationship Between Citizens and Politicians.- Political Services and the Content of Product Advertising.- Technology and the Relative Cost of Acquiring Political Information: Experience versus Search.- Summary.- 4 The Effect of Televising Legislatures on Elections: The Case of U.S. State Legislatures.- The Advantages to Incumbency in Televised Legislatures: State Lower Chamber.- Test for Reverse Causation.- State Upper Chambers.- Summary.- 5 The Effects of Televised Legislatures on Elections: The Case of the U.S. House of Representatives.- U.S. House Races: Before Versus After TV.- Test for Spurious Correlation.- Summary.- 6 The Effect of Televised Legislatures on the Output of Legislation.- A Model of Television and Legislative Outcomes.- Empirical Estimation.- Summary.- 7 The Politics of Adopting Televised Sessions.- Political Influences on Legislators.- Empirical Model of Support for Television in the U.S. Senate.- Summary.- 8 Modernity.- Appendix 1 Data Sources.- Appendix 2 Data.