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A MODEL OF GOVERNMENT ENTERPRISE IS DEVELOPED WHICH CONTRASTS THE SUPPLY BEHAVIOR OF GOVERNMENT AND PROPRIETARY ORGANIZATIONS. REFUTABLE IMPLICATIONS ARE DERIVED FROM AN EXPLICIT INFORMATION STRUCTURE IN WHICH THE PRODUCTIVITY OF MANAGEMENT MUST BE MONITORED INDIRECTLY AND DIFFERENTLY FOR THE TWO TYPES OF ORGANIZATIONS. MANAGERS ARE ASSUMED TO BE WEALTH MAXIMIZERS.

This article presents a theory of the size and party composition of cabinet governments in multiparty democracies. The object of the theory is to improve our understanding of the causal linkages that exist between the choices politicians perceive and the historically determined political and social structures that give meaning to these perceptions and lead politicians repeatedly to make essentially the same choices. A typology of multiparty democracies is employed to capture the decisive political and social structures that give meaning to these perceptions. The structural attributes, in conjunction with a constellation of bargaining relationships, lead to predictable government formation outcomes.

Government grants in federal countries account for a small share of the national product of these countries. I suppose that this, and the fact that federal arrangements are relatively flexible, explains why no well-organized body of economic doctrine deals with the issues raised by the existence of these grants. In terms of general principles, I venture the opinion that the consensus among economists—though perhaps not among students of public administration—holds that these grants can be defended with ethical and distribution arguments, but that on grounds of efficiency (in the economist's sense) and resource allocation they are to be condemned. Further, I would guess that majority opinion would favour unconditional over conditional grants on the ground that the latter do not respect the sovereignty of the "consumer" or of the spender.These principles seem to have been accepted and even defended by economists like Bhargava, Buchanan, and Scott and to have received the support of Dehem and Wolfe among others. Dissenters, like Buchanan—on the question of efficiency versus ethics—have dissented only in part.

Several attempts have been made recently to explain the formation of coalitions, especially government coalitions. Most of these theories assume that each of the actors involved (political parties in the case of government coalitions) uses only one criterion — such as the 'size' of the coalition or its 'ideological diversity' — in choosing between alternative coalitions. The criterion yields for each actor a preference ranking of all the possible coalitions. It is then assumed that the coalitions which are most likely to form are those which are 'in equilibrium' or 'undominated', a coalition T being undominated if there is no other coalition which is preferred by all its members to T.

The project on which this paper reports is aimed not only at increased understanding of the United States federal budget process, but also at predicting government expenditures in total and by bureau with a view to their determination within United States national econometric models. Estimates of likely expenditures using standard econometric techniques are poor, both in absolute terms and in comparison with our own work. Management of the economy should be improved by the use of predictors based on considering budgeting as a political process that is responsive to economic and social conditions. Use of mathematical models in the social sciences should be furthered, not by arguing their hypothetical utility, but by demonstrating that they work. The proof is in the prediction.

1 Analyzing Government -- Two Approaches to Analyzing Government -- The Interest-Group Theory of Government -- Plan of the Study -- Notes -- 2 Questions to be Answered -- Wealth Transfers and Organization Costs -- The "Market" for Wealth Transfers -- What This Analysis Is Not About -- What This Analysis Is About -- Summary -- Appendix: Heterogeneity Begets Wealth Redistribution -- Notes -- 3 The Demand and Supply of Wealth Transfers -- Maximizing the Returns from Legislation in a Bicameral -- Vote Market -- Empirical Evidence from State Legislatures -- Summary -- Notes -- 4 Legislatures as Wage Cartels -- Theory and Preliminary Implications -- A Test of Relative Wage Implications -- Wage Pay and Malfeasance -- Summary -- Notes -- 5 The Outside Earnings of Politicians -- The Market for Legislators -- Empirical Evidence from State Legislatures -- Low Wage Pay as an Entry Barrier in Politics -- Summary -- Notes -- 6 The Supply of Majority Leadership -- Competition for Majority Leadership -- Empirical Evidence from State Legislatures -- Summary -- Notes -- 7 The Determinants of Executive Branch Compensation -- Gubernatorial Compensation -- The Question of Malfeasance -- Summary -- Notes -- 8 Summary, Conclusions, and Future Directions -- Notes -- Name Index.