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Constitutions and Policy Comparisons

Direct and Representative Democracy When States Learn From Their Neighbours

Max Planck Institute fur Ökonomik, Kahlaische Strasse 10, 07745 Jena, Germany, hugh-jones{at}econ.mpg.de

Voters in democracies can learn from the experience of neighbouring states: about policy in a direct democracy (`policy experimentation'), about the quality of their politicians in a representative democracy (`yardstick competition'). Learning between states creates spillovers from policy choice, and also from constitutional choice. I model these spillovers in a simple principal-agent framework, and show that voter welfare may be maximized by a mixture of representative and direct democratic states. Because of this, empirical work examining voter welfare under direct democracy may need to be reinterpreted. Also, I show that the optimal mix of constitutions cannot always be achieved in a constitutional choice equilibrium involving many states.

Key Words: constitutional choice • direct democracy • policy experimentation • yardstick competition

Journal of Theoretical Politics, Vol. 21, No. 1, 25-61 (2009)
DOI: 10.1177/0951629808097283


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