Dynamic Legislative Bargaining with Veto Power
Salvatore Nunnari ()
No 12938, CEPR Discussion Papers from C.E.P.R. Discussion Papers
In many domains, committees bargain over a sequence of policies and a policy remains in effect until a new agreement is reached. In this paper, I argue that, in order to assess the consequences of veto power, it is important to take into account this dynamic aspect. I analyze an infinitely repeated divide-the-dollar game with an endogenous status quo policy. I show that, irrespective of legislators' patience, the initial division of resources policy eventually gets arbitrarily close to full appropriation by the veto player; that increasing legislators' patience or decreasing the veto player's ability to set the agenda makes convergence to this outcome slower and the power to veto less valuable; and that the veto player supports reforms that decrease his allocation. These results stand in sharp contrast to the properties of models where committees bargain over a single policy.
Keywords: Dynamic Legislative Bargaining; Endogenous Status Quo; Markov perfect equilibrium; Veto Power (search for similar items in EconPapers)
JEL-codes: C72 C73 C78 D71 D72 D78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-gth
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