Find the median voter eqm, Business Economics

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In the model with utilities

Wi = ci + α ln(xi)

where individuals are endowed with ability levels wp < wm < wR and form fractions πp, πm, πr with πm > πp, πr such that the median person is in group m.

  • Find the median voter eqm.
  • Now consider a situation where wp falls. What changes at eqm?
  • What if wm rises?

 


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