On the efficiency of equilibria in a legislative bargaining model with particularistic and collective goods

This study analyzes the efficiency of equilibria in a multilateral bargaining game in which a legislature divides its budget among collective and particularistic goods. In order to disentangle the causes of inefficiency, we extend the model of Volden and Wiseman (Am Polit Sci Rev 101:79-92, 2007) by considering quasi-linear utility functions, and consensus requirements ranging from simple majority to unanimity. Although unanimous agreements can be reached under weaker consensus requirements, we show that (Pareto) inefficiency is associated with non-unanimous consent. We also study how (i) the endogenous selection of the legislature's size or (ii) a sequential choice of collective and particularistic spending eliminates or attenuates the inefficiency problem.