Question

Suppose that there are 1,000 voters in your city. A total of 400 are willing to pay up to $25 each for the construction of a park, and the other 600 are willing to pay only $10. The construction of the park will cost $12,000. Someone proposes a vote on whether to tax each citizen $12 in order to finance the park.

(a) What will be the result according to the median voter model? Is this result socially efficient? Explain.
(b) What if instead of being willing to pay up to $25 each, the 400 residents were willing to pay up to $50 each?

Answer 1

According to the median voter model, the result of the vote will be determined by the preferences of the median voter. If the preferences of the median voter align with financing the park, the proposal will be accepted. This outcome may or may not be socially efficient depending on the preferences of the majority of voters.

Step-by-step explanation:

According to the median voter model, the result of the vote on whether to tax each citizen $12 to finance the park will be determined by the preferences of the median voter. In this case, the median voter is the voter at the 500th position, as there are 1,000 voters in total.

(a) Assuming that the median voter prefers to keep their $12 instead of financing the park, the result would be a rejection of the proposal. This result may not be socially efficient, as the majority of voters who are willing to pay up to $25 for the park would not have their preferences met.

(b) If the 400 residents were willing to pay up to $50 each, the median voter would still be the voter at the 500th position. However, this time the median voter's preference would align with financing the park, resulting in the proposal being accepted. This outcome may be socially efficient as the preferences of the majority of voters are being met.