Political Power and Economic Policy. Theory, Analysis, and Empirical Applications

Transcription

1 SUB Hamburg A/ Political Power and Economic Policy Theory, Analysis, and Empirical Applications GORDON C. RAUSSER University of California, Berkeley JOHAN SWINNEN Catholic University of Leuven PINHAS ZUSMAN CAMBRIDGE UNIVERSITY PRESS

2 Contents List of Figures List of Tables Preface page xi xiv xv PART 1 POLITICAL POWER AND ECONOMIC ANALYSIS 1 Public Policy: The Lens of Political Economy Introduction The Lens of Political Economy Literature Review Structure and Major Themes of the Book 21 2 The Nash Solution to the Bargaining Problem Introduction The Nash Solution to the Bargaining Problem with Fixed Disagreement Payoffs The Pivotal Axiom and Alternative Approaches Conclusion 49 3 The Harsanyi Solution to the Bargaining Problem Introduction Endogenous Disagreement Payoffs The n-person Bargaining Game Reciprocal Power Relations Conclusion 63 4 Political-Economic Analysis Introduction Organization of the Political System The Political-Economic Structure 67

3 vi Contents 4.4 Conflict Resolution and the Equilibrium Relations Conclusion 87 5 Normative Political-Economic Analysis Introduction Evaluation Criteria of Social Benefits and Costs Political-Economic Efficiency Conditions Evaluation of Structural Policies Conclusion Dynamic Political-Economic Analysis Introduction The General Structure of a Political Economy as a Dynamic System The Dynamics of Political Power Political "Traps" and Policy Reforms Conclusion 122 PART 2 IDEOLOGY, PRESCRIPTION, AND POLITICAL POWER COEFFICIENTS 7 Political Power, Ideology, and Political Organizational Structures Introduction The Nature of Ideology Ideological Commitment and Policy Formation Implications for Empirical Analysis The Organization of Interest Groups and Policy Formation Interest Groups and the Organization for Collective Action Political Entrepreneurs, Internal Group Organization, and Within-Group Equilibrium Group Political Preferences and Political Power Implications of the Organization of Interest Groups Government Structure Political Parties Conclusion Political Power, Influence, and Lobbying Introduction General Formulation of the Framework Costs of Organization Lobbying as a Common-Agency Problem 155

4 Contents vii 8.5 Lobbying under Asymmetric Information Expanding the Framework: PERTs and PESTs Conclusion Constitutional Prescription and Political Power Coefficients Introduction Constitutional Rules and Policy-Making Centers Evaluation of Alternative Constitutional Rules Constitutional Space Prescription Conclusion 189 PART 3 ANALYSIS OF SPECIFIC STRUCTURES 10 The Political Economy of Commodity Market Intervention Introduction The Political Structure Policy Formation: The Political-Economic Equilibrium Welfare Implications Conclusion The Political Economy of Public Research and Development Introduction Market Relations and the Demand for Public R&D Management and Organization of Public R&D The Political Structure The Political-Economic Equilibrium Policy Efficiency of the Political-Economic Equilibrium Public Research Policy Conclusion Political-Economic Analysis of Redistributive Policies and Public Good Investments Introduction The Government's Policy Decisions Price Subsidies and Research Expenditures: Are They Complements or Substitutes? Conclusion Interest Groups, Coalition Breaking, and Productive Policies Introduction Interest Group Structure Targeting Payments under Heterogeneous Adoption 243

5 viii Contents 13.4 Non-coincidental Consumer and Taxpayer Interests and Output Constraints Other Transfer Schemes Conclusion 252 Appendix to Chapter Policy Reform and Compensation Introduction The Model The Political-Economic Equilibrium Compensation, Ownership, and Mobility Conclusions Appendix to Chapter Political-Economic Analysis of Land Reform Introduction The Economic Structure The Political Structure The Political-Economic Equilibrium Evaluating the Economic Efficiency of Land Reform Conclusion Political-Economic Analysis of Water Resource Systems Introduction The Structure of a Water Resource Political Economy The Physical Water Resource Sub-system The Economic Structure The Political Power Structure The Hydrological-Political-Economic Equilibrium Conjunctive Water Use with Short Water Supply Conclusion A The Effects of Districts' Narrow Rationality on Water Prices and the Stationary Groundwater Level (Ample Water Supply at the Northern Source) B The Effects of Districts' Narrow Rationality on Groundwater Level When Groundwater Pumping Is Rationed (Short Water Supply) The Political Economy Lens on Quality and Public Standard Regulations Introduction Interest Group Configuration The Political Economy of Public Standards 333

6 Contents ix 17.4 Trade and Economic Development A Dynamic and Strategic Political Economy Theory of Quality Regulation Conclusion Political-Economic Analysis in Transition Economies Introduction The Model Restructuring the Inter-temporal Tradeoff Open and Closed Economies Vicious and Virtuous Circles Structural Conditions, Communist Organization, and the "p - 5-Temporal Tradeoff" Conclusion A The Monotonicity Property The Power of Bureaucracies: The European Commission and EU Policy Reforms Introduction The Decision-Making Process Status Quo Bias: The Importance of External Changes for Policy Reform The Power of the Commission Conclusion 389 PART 4 EMPIRICAL APPLICATIONS OF POLITICAL POWER ESTIMATION 20 Political Econometrics Introduction Formulation Estimation and Testing Policy Instruments and the Negotiation Network Conclusion The Political Econometrics of the Israeli Dairy Industry Introduction The Israeli Dairy Program The Economic Structure of the Israeli Dairy Market The Political Structure of the Israeli Dairy Industry The Political-Economic Equilibrium in the Israeli Dairy Market 416

7 x Contents 21.6 The Internal Structure of the Political Conflict Conclusion Flexible Policy Instruments Given a Political-Power Distribution Introduction Specification and Estimation of the Constraint Structure Estimation of the Policy Governance Function Estimation of the Automatic Adjustment Rules Validation and Assessment of the Automatic Adjustment Rules Toward a Simpler Set of Automatic Adjustment Rules Conclusion A Estimated Constraint Structure Equations Estimating Statistical Properties of Power Weight Parameters and Their Temporal Shifts Introduction Empirical Formulation Bootstrapped Standard Errors for Power Weight Parameters An Empirical Application to Japanese Policy Conclusion The Role of Institutions in the Joint Determination of PERTs and PESTs Introduction PERTs and PESTs in Developing and Developed Countries The Impact of Development: A Conceptual Model The Impact of Institutions Econometric Analysis Regression Results Conclusions and Implications 487 References 489 Index 515