A political economy model of market intervention

Candel-Sánchez, F. ; Perote-Peña, J. (Universidad de Zaragoza)

Resumen: We argue that political competition based on income redistribution à la Lindbeck and Weibull (Public Choice 52:273-297, 1987) may cause distortive regulation in a competitive sector. For this purpose, we propose a model in which imposing a production quota allows the extraction of rents that are then used for vote-buying purposes. Our model permits us to analyze the response of regulatory policy to political factors, such as the size of a group of informed voters and the accuracy of their information about the incumbent. We also show that the extent of voter influence on policy outcomes is shaped by the state of market demand. In particular, if demand becomes weaker, market intervention increases in a magnitude that depends positively on the electoral weight of informed voters.

Idioma: Inglés

DOI: 10.1007/s11127-012-9933-0

Año: 2013

Publicado en: PUBLIC CHOICE 157, 1-2 (2013), 169-181
ISSN: 0048-5829

Factor impacto JCR: 0.81 (2013)

Categ. JCR: POLITICAL SCIENCE rank: 68 / 156 = 0.436 (2013) - Q2 - T2
Categ. JCR: ECONOMICS rank: 162 / 332 = 0.488 (2013) - Q2 - T2

Tipo y forma: Article (Published version)

Área (Departamento): Área Fund. Análisis Económico (Dpto. Análisis Económico)