Legislative Majorities as Nonsalvageable Assets”
Southern Economic Journal
Without enforcement mechanisms, agreements between interest groups and legislators would be worthless. Political exchanges, like private transactions, require some assurance that agreements will be honored after the terms of trade are reached. Interest groups are not likely to expend resources to secure the passage of legislation if laws once enacted are easily altered or repealed. Mechanisms to maintain political bargains are the central focus of the interest-group theory of the independent judiciary developed by William Landes and Richard Posner . The judicial branch acts as a third-party enforcer of agreements struck between the legislative branch and interest groups. This mechanism for enforcement is analogous to an explicit contract. The Landes-Posner framework and its extensions are reviewed and summarized below. One of our purposes in this paper is to broaden the analysis of the enforcement problems associated with political transactions. Where explicit political contracts are inadequate or expensive, we examine the use of implicit or self-enforcing mechanisms. In contrast to third-party enforcement, implicit contracts are self-enforcing in the sense that they rely on the threat of the termination of an interest group's wealth transfer to maintain the transactional relationship.
Legislative Majorities as Nonsalvageable Assets” (with W. Mark Crain and Robert D. Tollison), Southern Economic Journal 55 (October 1988), pp. 303–314; reprinted in W. Mark Crain and Robert D. Tollison (eds.), Predicting Politics: Essays in Empirical Public Choice, Ann Arbor: University of Michigan Press, 1990, pp. 115–129.