Bargaining in Legislatures over Particularistic and Collective Goods

Abstract

We develop a bargaining model in which a legislature divides a budget among particularistic and collective goods. By incorporating both private and public goods in a unified model, we uncover nonmonotonic relationships between legislative preferences for collective spending and the amount of the budget actually allocated to collective goods. Put simply, policy proposers can exploit coalition partners' strong preferences for public goods to actually provide fewer public goods in equilibrium while directing more private goods to themselves. These results explain why policy reforms to limit special interest spending often fail. This unified model also sheds new light on when legislatures prefer open or closed amendment rules and when coalitions take different sizes and shapes.