Semester

Spring

Date of Graduation

2003

Document Type

Dissertation

Degree Type

PhD

College

Chambers College of Business and Economics

Department

Economics

Committee Chair

Russell S. Sobel.

Abstract

This dissertation is a collection of papers that features applications of public choice theory to the relationship between political constraints, incentives, and individual economic behavior. The first chapter introduces the two meanings of political constraints---(i) constraints self-imposed on the political process and (ii) constraints created by the political process; reviews the public choice literature on political constraints and incentives; and outlines the research agenda for the dissertation. Chapter 2 examines the possible inefficiencies that may be produced by politicians pursuing their own self interests by comparing two forms of city government. More specifically, comparisons are made between professionally trained city managers and popularly elected mayors, and results show that city managers have a relative efficiency advantage over elected mayors. Chapter 3 analyzes how minimum drinking age laws influence drinking behavior by examining the incentive for underage U.S. citizens to cross international border crossings to avoid the nationally uniform 21-year-old drinking age. Results show that the occurrence of alcohol-related motor-vehicle fatalities, the most serious outcome of mixing drinking and driving, increases as proximity to the nearest border crossing decreases. Chapter 4 enhances the reported link between entrepreneurship and economic growth, tests the causal relationship between venture funding and entrepreneurial activity, and ultimately reveals which policies create a good environment for entrepreneurship. Results show that entrepreneurial activity draws venture funding to an area, and not vice versa. Therefore, the results suggest that enacting policies consistent with economic freedom, such as low taxes, low regulations, and secure property rights that provide a good environment for attracting or developing individual entrepreneurs, are the appropriate economic development policies. Chapter 5 summarizes the major findings of the research chapters, reviews the importance of the major findings, and proposes areas of future research.

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