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ContributionofPublicChoiceLiterature…
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maximisingagent.Itstrivestoexplainwhytheinstitutionalarrangementsof
societyandeconomicrealityasawholedifferfromtheperfectlycompetitive
model.Atthesametimeitpointsoutthatdeviationsfromtheperfectlycom-
petitivemodelarenotnecessarilyinefficient.Onthecontrary,theymayserveas
abalancingcounterpointtotheexistenceoftransactioncosts.Theneedtocre-
ateatheoreticallywell-foundedbalancebetweenvariousalternativeinstitutional
arrangementsandtheorganisationofthelivesofindividualsinsocietyisoneof
theaimsoftheanalysisofthenewinstitutionaleconomics.
Intermsofthecorequestionsofenquiry,thenewinstitutionaleconomicsis
oftendividedintoseveralpartialtheories,includingpublicchoicetheory1.Public
choicewasbegunasanindependentresearchprogrammeinthe1960s.Itcanbe
definedasascientificdisciplinestraddlingtheborderbetweeneconomicsand
politicalscience,whichusesmethodologicaltoolsofeconomicstostudytheprob-
lemsthathavebeenthetraditionalprovenanceofthepoliticalsciences.
3.IntellectualContributionofPublicChoicetotheAcademicDebate
Officially,publicchoicetheorywasformedasanindependentdisciplinewith
thepublicationofTheCalculusofConsentbyJamesM.BuchananandGordon
Tullock2.Theyexplainedhowtherulesapplicableineconomicdecisionmaking
influencepoliticaldecisions.Lateron,J.M.Buchanandescribedpublicchoice
astheuseofcommonsenseinpolicyanalysis.Otherworksthatlaidoutthe
foundationofpublicchoicetheoryincludethepublicationofSocialChoiceand
IndividualValuesbyKennethArrow3,inwhichhepointedtotheinstabilityof
themechanismsofcollectivechoice.TheconceptknownasArrow’simpossibility
theoremshowsthattheredoesnotexistavotingrulethatwouldmeetthecriteria
oftheefficientvotingrule,whichwouldensurethatvotingwouldleadtoaneffi-
cientoutcome.
DuncanBlackcontributedtothedevelopmentofpublicchoicetheorywithhis
formulationofthemedian-votertheorem4.Accordingtothistheorem,ifvoters
areperfectlyinformed,theirpreferredalternativesarelinearlyorderedandevery
voterwillpreferonealternative.Underthesimplemajorityvotingrule,elections
1Constitutionaleconomics,rentseeking,propertyrightstheory,agencytheoryandtransaction
coststheoryareothertheoreticalapproachesbelongingtothenewinstitutionalapproach.
2J.M.Buchanan,G.Tullock,TheCalculusofConsent:LogicalFoundationsofConstitutional
Democracy,UniversityofMichiganPress,AnnArbor1962.
3K.J.Arrow,SocialChoiceandIndividualValues,JohnWileyandSons,NewYork1951.
4D.Black,OntheRationaleofGroupDecision-making,“JournalofPoliticalEconomy”1948,
vol.56,no.1,February,UniversityofChicagoPress,pp.23–34.