Gridlock and inefficient policy instruments

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Show simple item record Austen-Smith, David Dziuda, Wioletta Harstad, Bård Loeper, Antoine 2020-06-11T11:32:07Z 2020-06-11T11:32:07Z 2019-11
dc.identifier.bibliographicCitation Theoretical economics, 14(4), Pp. 1483-1534
dc.identifier.issn 1933-6837
dc.identifier.issn 1555-7561 (online)
dc.description.abstract 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.
dc.description.sponsorship 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).
dc.format.extent 52
dc.language.iso eng
dc.publisher Econometric Society
dc.rights © 2019 The Authors.
dc.rights Licensed under the Creative Commons Attribution-NonCommercial License 4.0.
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.subject.other Dynamic games
dc.subject.other Political economy
dc.subject.other Political instruments
dc.subject.other Bargaining
dc.title Gridlock and inefficient policy instruments
dc.type article
dc.subject.eciencia Economía
dc.rights.accessRights openAccess
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/683031/CONSERVATION
dc.relation.projectID Gobierno de España. RYC-2015-18326
dc.relation.projectID Gobierno de España. ECO2016-75992-P
dc.relation.projectID Gobierno de España. MDM 2014-0431
dc.relation.projectID Comunidad de Madrid. S2015/HUM-3444
dc.type.version publishedVersion
dc.identifier.publicationfirstpage 1483
dc.identifier.publicationissue 4
dc.identifier.publicationlastpage 1534
dc.identifier.publicationtitle Theoretical Economics
dc.identifier.publicationvolume 14
dc.identifier.uxxi AR/0000024475
dc.contributor.funder Comunidad de Madrid
dc.contributor.funder European Commission
dc.contributor.funder Ministerio de Economía y Competitividad (España)
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