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Deceptive Redistribution

Author

Listed:
  • Simeon Alder

    (Notre Dame University)

  • Guillermo Ordonez

    (University of Pennsylvania)

Abstract

While some policies can enhance welfare, they may also provide rents to politicians on occasion. Opportunism is usually constrained by the policymakers' reputation concerns. However, if instances of rent-seeking are not easily identified, the strength of this concern hinges critically on the informed constituents' ability to share their knowledge with the rest of society. We show that governments use excessive redistribution to discourage information sharing. In contrast to the standard view that inefficient policies are necessary to implement redistribution, we argue that redistribution can perpetuate inefficient policies that generate private rents. The model matches salient stylized facts on redistribution. (Copyright: Elsevier)

Suggested Citation

  • Simeon Alder & Guillermo Ordonez, 2016. "Deceptive Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 22, pages 223-239, October.
    • Handle: RePEc:red:issued:14-175
    DOI: 10.1016/j.red.2016.08.003
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    More about this item

    Keywords

    Redistribution; Reputation; Private information; Rent-seeking; Media; Election;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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