On Thu, 29 Aug 2002, Fred Foldvary wrote: > The excess payments "must be wasted or given to nonvoters to keep all the > incentives correct." (p., 1154). In a footnote, T&T suggest that waste could > be avoided if "pairs of communities" "agree to exchange their collections of > these excess revenues." This is in accord with my proposition that demand > revelation does NOT imply the need to waste the resources.
Your summary of Tideman/Tullock is bang on. I was only going on about the need for resource wasting because it seemed that you were arguing that the project being voted on would be funded through the taxes collected through the DRP. If this were the case, this would obviously induce incentive changes that would affect stated valuations. There have been a number of modifications to the DRP that have been proposed to avoid wasting the money collected. These losses seem second order, though, when compared to the losses likely to be generated by expressive voters using the DRP. Eric Crampton
