By applying the standard tools of microeconomic analysis, I argue that democratic markets work as well as economic markets. In particular, I show that previous work has greatly exaggerated the existence of principal-agent and informational problems in electoral markets and has drawn incorrect conclusions.

Private income transfers are becoming increasingly recognized as a key aspect of the U.S. economy. The majority of private income transfers occur inter vivos (i.e., between living persons), but very little is known about this type of transfer behavior. This paper tests alternative hypotheses concerning motivation for inter vivos transfers. Two motives are considered: altruism and exchange. Evidence presented here casts doubt on the altruistic model of transfer behavior. Observed patterns for inter vivos transfers are more consistent with exchange-related motives. This finding has important implications for the effects of public transfer programs on the distribution of economic well-being.

reasonings as to the effects of the economies in production, which an individual firm gets from an increase of its output are apt to be misleading, not only in detail, but even in their general effect.--Marshall