Gridlock and Inefficient Policy Instruments
| Autor: | David Austen-Smith, Wioletta Dziuda, Bård Harstad, Antoine Loeper |
|---|---|
| Přispěvatelé: | Comunidad de Madrid, European Commission, Ministerio de Economía y Competitividad (España), Consejería de Educación, Juventud y Deporte, Comunidad de Madrid |
| Rok vydání: | 2019 |
| Předmět: |
Legislative veto
Dynamic games Gridlock Status quo media_common.quotation_subject Veto Economía political economy Politics 0502 economics and business ddc:330 Pigou effect Economics D78 050207 economics Law and economics media_common Public economics 05 social sciences Stochastic game Pareto principle bargaining Repeal Fiscal policy 050206 economic theory Environmental regulation General Economics Econometrics and Finance political instruments Externality |
| Zdroj: | Theoretical Economics e-Archivo. Repositorio Institucional de la Universidad Carlos III de Madrid instname e-Archivo: Repositorio Institucional de la Universidad Carlos III de Madrid Universidad Carlos III de Madrid (UC3M) |
| ISSN: | 1933-6837 |
| Popis: | Why do rational politicians choose inefficient policy instruments? Environmental regulation, for example, often takes the form of technology standards and quotas even when cost-effective Pigou taxes are available. To shed light on this puzzle, we present a stochastic game with multiple legislative veto players and show that inefficient policy instruments are politically easier to repeal than efficient instruments. Anticipating this, heterogeneous legislators agree more readily on an inefficient policy instrument. We describe when inefficient instruments are likely to be chosen, and predict that they are used more frequently in (moderately) polarized political environments and in volatile economic environments. We show conditions under which players strictly benefit from the availability of the inefficient instrument. Harstad’s part of the research received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 Research and Innovation Program (Grant 683031). Antoine Loeper gratefully acknowledges the support of the Fundación Ramón Areces, of the Ministerio de Economía y Competitividad (Spain), grants RYC-2015-18326, ECO 2016-75992-P, and MDM 2014-0431, and of the Comunidad de Madrid, grant MadEco-CM (S2015/HUM-3444). |
| Databáze: | OpenAIRE |
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