In this essay, James Buchanan presents the "Public choice theory" as a "theory of governmental failure" comparable to the "theory of market failure" that emerged from theoretical welfare economics. Buchanan defines public choice as the analysis of the behavior of individual actors in the governmental sector (voters, candidates, elected representatives, members of political parties and bureaucrats) and the composite outcome observed. He presents two distinct areas of research: (1) economic theory of constitutions and (2) theory of political institutions. First, the economic theory of constitutions raises questions about how governments may be constrained. Second, the theory of political institution analyses the demand and supply for government goods and services under different rules (theory of voting and voting rules, theories of electoral and party competition and theories of bureaucracy). Afterwards, Buchanan proceeds to explain these two set of theories.
Public choice scholars have started to model governments in monopoly terms. The electoral competition is viewed as a competition among prospective monopolists, bidding for an exclusive franchise. Moreover, the successful bidder behavior is assumed to be profit maximizing.
The following questions arise:
(1) Why is it important to use the methodological individualistic approach in Public choice theory?
(2) What causes the complexity in political exchange?
(3) Are the constitutional guarantees for free and periodic elections enough to control the range an extent of governmental action?
(4) What political decision structures should be adopted at the constitutional stage?
(5) What are some examples of the majority cycle problem discovered by Black? Under which configuration of preferences, the majority cycle problem will not arise?
(6) What is the Arrow impossibility theorem?
(7) Do the re-election possibilities keep the self-interests of politicians within reasonable range of those of the median voter?
(8) How can the conflicts of interest between the representative or agent elected to act for the group, the bureaucracy in charge of the policy implementation and the group members themselves be reconciled?
(8) Can the Leviathan be limited?
The essay Public Choice: The Origins and Development of a Research Program can be found here:
http://www.gmu.edu/centers/publicchoice/pdf%20links/Booklet.pdf
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