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Economic Theory

, Volume 67, Issue 1, pp 319–344 | Cite as

Simple dynamics of legislative bargaining: coalitions and proposal power

  • David P. BaronEmail author
Research Article

Abstract

Most public policies continue in effect until changed, and many are stable for extended periods even though they could be changed at any time. This paper presents a simple approach to characterizing Markov perfect equilibria of dynamic legislative bargaining games with stable policies and durable coalitions. The approach involves satisfying proposer and partner incentive constraints when the coalition is formed and challenger defection and replacement constraints once the coalition has been formed. The approach provides a natural definition of coalition membership and facilitates characterization of the trade-off between internal and external proposal power. Surplus coalitions sacrifice external proposal power for increased internal proposal power, and the coalition size that maximizes proposal power is strictly decreasing in the discount factor and strictly increasing in the majority requirement.

Keywords

Dynamic legislative bargaining Coalitions Proposal power 

JEL Classification

C78 D72 D73 H11 

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Graduate School of BusinessStanford UniversityStanfordUSA

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