Abstract

We analyze the legislative interaction of representatives from big and small states in a Bicameral legislature that decides for the allocation of a fxed resource among the states. We assume that the two houses are mal-apportioned and big states are underrepresented in the upper house. We study the effect of this and other institutional features on the relative welfare of big and small states and on equilibrium coalitions. Contrary to common belief, an increase in the representation of small states may reduce their expected payoff, ceteris paribus. Also, contrary to interpretations of minimum winning coalition theorems, excess majorities may occur in one of the two houses. When proposal making tends to be dominated by big (small) states, excess majorities occur in the upper (lower) house. We find that higher proposal power increases the payoff of a group of states. Changes in the majority requirements in the two houses and expansion to encompass more small (big) states have a non-monotonic effect on the relative welfare of the two groups. We conclude our analysis with an empirical application using calibrations results for the 103d US Congress and the legislative institutions of the European Union before and after the Treaty of Nice.

Citations