ABSTRACT
The theory of public goods, to focus on the first body of knowledge listed above, remains, even after the courageous attempts of Buchanan and others, a theory devoid of any decision-making mechanism. In other words, the theory is still mainly an existence theorem of welfare economics concentrating almost exclusively on the definition of equilibrium conditions, and the refinements and generalizations which have occupied researchers have done scarcely anything to remove this crippling and fundamental emptiness. The existing economic model of democracy incorporates essential institutional elements of observable democracies such as “representative” political parties, decision-rules, and one transaction cost, namely the cost of information. Very few of the strong features of decision-rules have been incorporated into the existing economic theory of democracy. The theory of democracy though grounded in decision theory, does not do very much more than pay lip service to the existence of public goods. The chapter also presents an overview of the key concepts discussed in this book.
