| This dissertation consists of two essays which study budgetary allocation and investment decisions for public goods. Chapter 1 investigates theoretically and empirically how a legislature allocates a budget to fund local public projects in an omnibus bill under unanimous agreement. While legislatures typically use majority rule to allocate a given budget in distributive legislation, near-unanimous consent over the broad allocation of benefits is pervasive. This phenomenon is commonly referred to as "universalism.'' I develop a game-theoretic model where heterogeneous players strategically interact in a universal coalition to determine allocations, with non-cooperative bargaining as a threat point for the breakdown of cooperation. I structurally estimate the model to quantify the effects of political power and actual needs on the agreed-upon allocation. Moreover, I analyze two types of misallocations which can arise---political power in the legislature can distort budgetary allocations geographically, and money can be allocated toward projects which are inefficient given a budgetary allocation. In the empirical application, I construct a unique dataset using a specific bill called the "Bridge Bill Capital Budget'' in 1992, which is an omnibus of grants for replacement and repair of bridges in Pennsylvania. I find that 19.5% of the aggregate budget would be allocated differently across counties if allocations were determined only based on actual needs. However, I find that political importance of bridges has smaller distortion on the choice of bridges selected for grants within counties.;In Chapter 2, I develop and estimate a dynamic stochastic discrete choice model to study the optimal timing for replacement of bridges. I use an equilibrium concept in which the transition of the stock of bridges generates self-fulfilling expectations of the engineer. Using the National Bridge Inventory data to estimate the model, the empirical findings suggest that the state and expected evolution of the aggregate stock attributes as well as technical characteristics of individual bridges affect maintenance decisions. |
