Gridlock and inefficient policy instruments

• 成果类型: Article
• 署名作者: Austen-Smith, David; Dziuda, Wioletta; Harstad, Bard; Loeper, Antoine
• 署名单位: Northwestern University; University of Chicago; University of Oslo; Universidad Carlos III de Madrid
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE3329
• 发表日期: 2019-11-01
• 页码: 1483-1534
• 关键词: Dynamic games; bargaining; political economy; political instruments

摘要

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.