Explaining Inefficient Policy Instruments
The purpose of this paper is to provide an overview of the literature on the political economy of policy instrument choice and relate it to the experiences in agriculture. The paper is therefore organized as follows. The second section provides a r...
| Main Author: | |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/585151468329339087/Explaining-inefficient-policy-instruments http://hdl.handle.net/10986/28275 |
| Summary: | The purpose of this paper is to provide
an overview of the literature on the political economy of
policy instrument choice and relate it to the experiences in
agriculture. The paper is therefore organized as follows.
The second section provides a ranking of policies as to
their transfer efficiency and determines the standard of
evaluation, given that no policy is perfect in achieving its
goals. The third section explores why political competition
does not ensure that an efficient policy instrument is
chosen. The following two sections explain the two key
theories: enforcement and commitment problems in section
four, and information and agency problems in section five.
Section six presents the important Grossman-Helpman model of
inefficient policy choice that falls outside these two
general theories. Section seven describes how policy
instrument choice in agriculture is often a discrete outcome
in response to a crisis and therefore becomes path
dependent, resulting in a status quo bias. Section eight
describes how trade agreements can affect policy instrument
choice. The final section gives some guidance as to the
outstanding issues. |
|---|