Pre-Publication Comments
Table of Contents
Downloadable Samples
About the Author
Classroom Resources
How to Buy

Brief  and Detailed Contents




Brief Contents



Chapter 1: The Field of Public Choice

Chapter 2: Market or Government?

Chapter 3: Private Property Rights, Public Goods, and Market Failure

Chapter 4: Politicians and the Constitution

Chapter 5: Constitutional Protection Against External Costs and Costs of Power Abuse

Chapter 6: Methods of Electing Legislators

Chapter 7: Voting and Elections: Some Simple Ideas

Chapter 8: More on Voting and Elections

Chapter 9: Inefficiency of Majority Rule

Chapter 10: Vote Trading and Efficiency

Chapter 11: The Legislature

Chapter 12: Political Parties and Pressure Groups

Chapter 13: Democracy and Bureaucracy: Some History

Chapter 14: Inefficiency of Bureaucracy

Chapter 15: Improvements and Reform

Chapter 16: Rent Seeking

Chapter 17: Privatization by Liquidating a Bureau

Chapter 18: Other Forms of Privatization

Appendix 1

Appendix 2


Subject Index

Name Index

Detailed Contents



Chapter 1: The Field of Public Choice


A.  Public Choice and Related Fields

      1.   Early Political Economy

      2.   Marx

      3.   Neoclassical Reaction to Marx

      4.   Emergence of Professional Economics

      5.   The Study of Market Failure

      6.   Macroeconomics

      7.   The Emergence of Public Choice

      8.   Political Science

B.  Ethics in Political Conduct

      1.   Public Choice and Morally Correct Action

      2.   Market Economy Bias

      3.   Making Assumptions about What People Want

C.  The Meaning and History of Democracy

      1.   Democracy Defined

      2.   History of Democracy

            a.   The Feudal System

            b.   The Rule of Law

            c.   Representation

      3.   Varieties of Democracy

D.  The Inefficiency of Democracy

E.  Plan of This Book


Chapter 2: Market or Government?

A.  Self-Interest in Life and Politics

      1.   The Assumption of Self-Interest

      2.   The Self-Interest Assumption in Economics and Politics

            a.   Charity

      3.   The Scientific Attitude

B.  Market Failure

      1.   The Dawn of Thinking About Market Failure

C.  Comparing Government with the Market

      1.   The Error of Underrating Market Solutions

      2.   The Error of Overrating the Government Solution

      3.   The Error of Neglecting Conformity

      4.   The Error of Neglecting Potential Abuse of Coercion

      5.   The Error of Neglecting Technology and Other Changes

            a.   Obsolescence in Government Institutions

      6.   Government Institutions Without an Economic Purpose


Chapter 3: The Private Property System, Public Goods and Market Failure

A.  The Wealth-Producing Capacity of a Private Property System

      1.   Adam Smith: Propensity to Specialize and Exchange

      2.   Frank Knight: Propensity to Save and to Bet on One's Business Judgment

      3.   Objections to the Private Property System

B.  The Public Goods Problem

      1.   Characteristics of Public Goods

      2.   The Jointness Problem

      3.   The Nonexclusion Problem

      4.   Incentives to Discover Public Goods

      5.   Bogus Public Goods

      6.   Other Means of Overcoming Public Goods Problems

C.  Joint Goods That are Excludable

      1.   The Contiguous Property Problem

      2.   Using Agents to Determine Appraised Value

      3.   The Presence of Contiguous Property Does Not Justify Government Supply of the Service

D.  Other Market Failures

      1.   The Collusive Monopoly

            a.   Luck vs. Initiative

            b.   Patents, Copyrights, and Trademarks

      2.   Natural Monopoly

      3.   Externality

E.  Buying Private Goods and Public Goods Compared

      1.   Buying a House

      2.   Buying National Defense

            a.   The Collective Monitoring Problem



Chapter 4: Politicians and the Constitution

A.  The Constitution as a Contract

      1.   National Defense and Private Property Rights

      2.   A Contract

            a.   Early Writers on the Constitution as a Social Contract

      3.   Definition of a Constitution

B.  Electing Politicians

      1.   Politicians and Bureaucrats

            a.   Appointees and Long Term Bureaucrats

            b.   A Conservative Bias

            c.   Bias Toward a Larger Government

            d.   Specialized Departments

      2.   The Problem of Choosing Politicians

            a.   Choosing Candidates

            b.   Deciding Which Candidate Wins

            c.   Costs of Competition Among Candidates

            d.   Voting Districts

            e.   Putting Election Rules in the Constitution

      3.   Frequency of Election, Term Limits, and Recall (Impeachment)

      4.   Presidents and Prime Ministers

      5.   Political Parties

C.  The Costs of Providing Public Goods Through a Collective Decision-Making Process

      1.   External Costs of Collective Decision-Making

      2.   Costs Due to Abuse of Power

Chapter 5: Constitutional Protection Against External Costs and Costs of Power Abuse

A.  The Separation of Government Branches

      1.   The Three Traditional Branches

            a.   The Legislature

            b.   The Executive Branch

            c.   The Judiciary

      2.   Rationale for Separating the Branches

            a.   Balance of Power

      3.   Separation of Powers in a Parliamentary System

      4.   Restricting the Executive Branch's Use of Force

B.  Freedom of and Rights to Information

      1.   Means of Raising Trustworthiness

      2.   Freedom of Speech and Press

C.  Rules Against Buying Votes

      1.   The Market for Legislators' Votes

      2.   The Market for the Electorates' Votes

D.  Rules Against Profiteering

E.  Other Constitutional Provisions

      1.   Rules Preserving the Market Economy

      2.   Constitutional Change

      3.   The Referendum

F.   How Protective Is a Constitution?


Chapter 6: Methods of Electing Legislators

A.  Systems of Representation

B.  Election Commissions And Candidacy Requirements

C.  Accounting for Voters' Preferences

      1.   One-Voter-One-Vote

      2.   One-Voter-Multiple-Vote

      3.   Approval Voting

      4.   Pluralities and Majorities

            a.   A Runoff Election

            b.   Hypothetical Additional Elections

D.  Strategic Action by Political Parties

      1.   Gerrymandering

      2.   The Party List System in a Multi-Representative District

      3.   The Party List System as a Means of Reducing Strategic Action



Chapter 7: Voting and Elections: Some Simple Ideas

A.  The Rational Voter Hypothesis

      1.   The Voter's Choice to Improve Decision-Making

      2.   More on the Influence of Sociological Factors

      3.   Implications

B.  The Median Voter Theorem

      1.   A Simple Model to Illustrate the Theorem

      2.   How Desirable is the Median Voter Outcome?

      3.   Nonsymmetrical Preferences and Two-Candidate Competition under Uncertainty

      4.   Non-Voting and Voter Confusion

      5.   Credibility

 C.   More Than Two Candidates

Chapter 8: More on Voting and Elections

A.  Multiple Issues and the Tendency Toward the Center of Opinion

      1.   Conditions Under Which a Median-Voter Strategy is not Optimal

      2.   Multiple Candidates

B.  Campaign Spending

      1.   A Model

      2.   The Center of Opinion Platform and Campaign Spending

C.  The Voters' Paradox

      1.   Agenda Manipulation

            a.   Introducing New Agenda Items

      2.   Strategic Voting

D.  Conclusion

Chapter 9: Inefficiency of Majority Rule

A.  Efficiency and Satisfaction in Public Good Supply

      1.   The Efficient Quantity

      2.   Interaction Among Public Good Demanders

      3.   Efficiency, Fairness, and Opting Out

            a.   The Case of Many Public Goods Consumers

B.  Efficiency and Satisfaction Under an Equal-Sharing Tax Rule

      1.   Conditions Under Which Efficiency Would Be Achieved

            a.   Consumers Have Identical Demands

            b.   Consumers Have Different Demands

      2.   Quantity Inefficiency Under an Equal SharingRule

      3.   Dissatisfaction with the Outcome

C.  Efficiency and Satisfaction Under an Income Tax

      1.   Efficiency

            a.   Equal Demands

            b.   Unequal Demands

D.  Simple Majority Rule May Harm the Collective

E.  A Supra-Majority Rule

F.   Public Goods Decision-Making in Real Democracies

G.  Conclusion



Chapter 10: Vote Trading and Efficiency

A.  Introduction

      1.   Inefficiency and the Incentive to Buy and Sell Votes

      2.   Legislative Vote Trading

      3.   Plan of the Chapter

B.  The Incentive to Buy and Sell Votes in a Direct Democracy, One-IssueVote

      1.   A Simple Small Numbers Example

      2.   A Large Numbers Example

      3.   Costs of Transactions

      4.   Conclusion

C.  Vote Trading as a Cause of Decreases in Efficiency in a Direct Democracy

D.  Vote Buying and Logrolling in the Legislature

      1.   Explicit and Implicit Logrolling (Issue-Combining)

E.  Vote Trading in World Democracies

      1.   Transition from the Patronage System

            a.   Gradual Realization of the Inefficiency of Patronage

            b.   Promoting Patronage vs. Promoting Democracy

            c.   National Promotion of Local Patronage



Chapter 11: The Legislature

A.  Introduction

      1.   Public Goods and Legislative Inefficiency

      2.   Laws and Self Interest

      3.   "Special" Interests and Political Pressure

      4.   Plan of This Chapter

B.  Understanding Legislators

      1.   Legislators' Motives

            a.   Income

            b.   Status and Power

            c.   The "Collective Interest"

      2.   The Legislator as a Functionary

C.  The Conflicting Pressures on Legislators

      1.   Legislators as Distributors of the Tax Burden

            a.   Different Means of Financing

            b.   Narrow and Broad Constitutional Powers to Distribute the Tax Burden

      2.   Legislators as Agents for the Supply of Impure Public Goods

            a.   Local Public Goods and Local Governments

            b.   Local Public Goods in the Absence of Local Governments

            c.   Spillovers

            d.   Club Goods

            e.   Club Goods in the Market Economy

            f.    Efficiency, Pressure, and the Division Between Club Goods and Local Public Goods

      3.   Legislators as Redistributors of Wealth

      4.   The Common Property Resource

      5.   Government-Owned Resources

      6.   The Choice of Supply Methods

      7.   Contiguous Property

      8.   Dealing With Other Market Failure

            a.   Monopoly

            b.   Natural Monopoly

            c.   Price Regulation Without Natural Monopoly

            d.   Pecuniary Externalities

            e.   Government Externalities

      9.   Macroeconomic Policy


Chapter 12: Political Parties and Pressure Groups

A.  Political Parties

      1.   Definition

      2.   Helping Candidates Get Elected

            a.   How the Political Party Helps Candidates

            b.   The Political Party Roundup: Early U.S. Elections

            c.   The Screening Service

            d.   The Spoils System and Campaign Contributions

            e.   Campaigning in Modern Times

            f.    Parties and Ideology

      3.   Parties as Centers for Logrolling

      4.   Parties as Conduits for Influence

B.  Pressure Groups

      1.   Pressure Groups and Interest Groups

            a.   Interest Groups vs. Businesses that Supply Club Goods

            b.   The Non-Profit Corporation

            c.   Interest Groups Relevant Only If They Are Also Pressure Groups

      2.   The Logic of Pressure Groups

      3.   Olson's Model of Collective Action

            a.   How the AARP Overcame the Free Rider Problem

            b.   Unions

            c.   Professional Associations

      4.   Lobbying

      5.   Pressure Groups and Political Parties Groups

            a.   The Rise of Pressure Groups in the U.S.

            b.   Interrelations Between Pressure Groups and Parties

      6.   Pressure Groups and Collective Decision-Making Efficiency

Chapter 13: Democracy and Bureaucracy: Some History

A.  Introduction

      1.   The Assumption That Democratic Bureaus areEfficient

      2.   Why Study Bureaucracy?

      3.   Plan of the Chapter

B.  The "Ideal" Bureaucracy

      1.   The Function of Government Administration

      2.   How to Assure That Administrators Perform Their Function

      3.   Weber's Ideal Bureaucracy Is Unrealizable in a Democracy

            a.   The Political Nature of Bureaucracy

            b.   Neglect of Bureaucrats' Self-Interest

            c.   Summary Assessment

C.  The History of Government Administration in the U.S.

      1.   The System of Class and Privilege

      2.   The Spoils System

      3.   Transition to the Modern Period

            a.   The First Civil Service Law

            b.   Decentralization of Congressional Power Over Agency Appointments

            c.   Growth of Presidential Power Over Agency Appointments

            d.   Passage of the Civil Service Act

            e.   Underlying Factors

            f.    Summary

      4.   The System Today

            a.   Hired Bureaucrats

            b.   Pay and Fringe Benefits

            c.   The Bureau Chief

            d.   Oversight by the President

            e.   Congressional Oversight

            f.    The Career Bureaucrats

      5.   Oversight in a Parliamentary System

D.  The Analysis of Bureaus: a Complex Problem

Chapter 14: Inefficiency of Bureaucracy

A.  Environment of the Bureau

      1.   The Budgeting Interaction

            a.   From the Bureau to the Legislature

            b.   The Committee System

            c.   Why Committees?

            d.   Passing the Budget Bill

       1.   Demand and Supply of Public Goods and Private Goods Compared

B.  The Bureau Chief

      1.   Business Heads and Bureau Chiefs: The Fixed Salary Assumption

      2.   The Bureau Chief as a Budget-Maximizer

      3.   Maximizing the Budget to Obtain Trading Credits

            a.   Politicians

            b.   Lower Level Bureaucrats

            c.   Consumers

            d.   Resource Suppliers

      4.   Leisure as a Goal

C.  A Model of Bureaucratic Demand and Supply

      1.   The Optimal Budget from the Consumers' Standpoints

            a.   The Zero-Surplus Budget

D.  Why Budgets Tend to be Higher Than Optimal

      1.   Politicians' Demands for High Bureau Budgets

      2.   Use of National Taxes to Finance Local Public Goods

      3.   How The Method of Financing Can Fool Taxpayers

            a.   Taxes

            b.   Borrowing

            c.   Creation of New Money

      4.   Voter Bias Due to Asymmetry of Knowledge among Resource Suppliers

E.  Describing the Budgeting Outcome

      1.   Budget Maximization and Information Asymmetry

      2.   A Bloated Government

      3.   Limits to Budget-Maximization Model

      4.   Bureaus as the Outcome of a Political Process

            a.   The Presidential System

            b.   The Parliamentary System

      5.   Other Approaches to Bureaucracy

F.   Bureaus and Self Interest

      1.   The Decline of the Idea of the Public-Interested Bureaucrat

Chapter 15: Improvements and Reforms

A.  Producing Information Needed to Judge Efficiency

      1.   Requiring Benefit-Cost Analysis

            a.   An Independent, Non-Partisan Accounting Bureau

            b.   Installing Professional Monitors

      2.   Making Comparisons

            a.   Mixed National and Local Public Goods

            b.   Decentralizing

B.  User Fees

      1.   The Economist's Interest in User Fees for Government-Provided Club Goods is Practical

      2.   Opportunity Cost of Land

      3.   Efficiency and Congestion

      4.   Inefficiency Due to Bureaucratic Rationing

      5.   Resistance to User Fees and Policies to Overcome It

Chapter 16: Rent Seeking

A.  The Analytics of Rent Seeking

      1.   Example 1: The Pure Monopoly

            a.   Market Privilege Rent Seeking

            b.   Rent Seeking Investments by Potential Monopolists Under Complete Certainty

            c.   Uncertainty Faced by Rent Seekers

            d.   Consumer Reaction to Rent Seeking

      2.   Example 2: The Import Tariff

            a.   Two Sets of Gainers

            b.   Collective Decision-Making Costs

            c.   Consumer Reaction

            d.   Rent Seeking Loss

B.  Classifying Rent Seekers: An Example of Taxis

      1.   Taxi Drivers as Rent Seekers

      2.   Commission Members As Rent Seekers

      3.   Politicians as Rent Seekers

      4.   Recipients of Services and Taxpayer Groups as Rent Seekers

C.  A More Complex Example

D.  Redistributional Rent Seeking

Chapter 17: Privatization

A.  Introduction

      1.   Types of Privatization

      2.   Plan of This Chapter

B.  The Tendency to Delay Liquidation

      1.   Pressure from Gainers and Losers

            a.   Taxpayers

            b.   Consumers of Other Services

            c.   Beneficiaries of the Auction

            d.   Administrators and Employees

            e.   Other Suppliers of Resources

            f.    Recipients of the Service

            g.   Other Factors

            h.   The Politician's View

      2.   Deferred Benefits of Civil Service Workers

            a.   The Civil Service Debt

            b.   How Deferred Benefits Delay Liquidation

C.  Improving the Prospects for Liquidation

      1.   Severance Pay to Compensate Workers

      2.   Compensating the Former Beneficiaries of Government Services

            a.   Reliance Compensation

D.  Administration

      1.   Laying Off Factors

      2.   Raising Funds to Pay Compensation

      3.   Selling Off Assets

      4.   Who Should Administer?

Chapter 18: Other Forms of Privatization

A.  Contracting Out

      1.   Competitive Contracting

      2.   Price Fixing

            a.   Price Fixing in Government Contracts vs. Market Price Fixing

            b.   Rewarding Suppliers Who Lose the Bid

            c.   Price Fixing as a Means of Redistribution

            d.   Resource Wastes due to Price Fixing

            e.   Deterring Price Fixing

            f.    Losses from Price-Fixing vs. Losses from Bureau Supply

            g.   Gangsterism

      3.   Monitoring the Supply

            a.   A Complaint Bureau

            b.   Periodic Inspections

            c.   Rewards for Whistle-Blowing

      4.   Contracts in Which the Service Cannot be Fully Specified

      5.   Allocation of Uncertainty

            a.   Producer Should Bear Uncertainty for Completing Contracts That Can be Clearly Specified

            b.   Research Contracts

B.  The Voucher System

      1.   Resistance to the Voucher System

      2.   Pressure to Control Voucher Conditions

C.  Breaking up Government-Owned Monopolies

      1.   The Case of Public Utilities

            a.   Inefficiency of Regulated Monopoly

            b.   Regulation to Promote Technological Progress?

            c.   Allowing Competition

            d.   Is It Really a Monopoly?

            e.   Promoting Competition after Paying Setup Costs

      2.   The Temporary Monopoly Franchise




A.  Why Legislative Committees?

B.  Graph and Discussion Relating to Rent Seeking