This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Regulation in a Political Economy: An explanation of limited commitment of governments in the context of the ratchet effect

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Roland Strausz ()

Additional information is available for the following registered author(s):

Abstract

This paper offers an explanation why governments have limited commitment and are susceptible to the ratchet effect. It analyzes a two period model in which a government with full commitment regulates a firm. Each period is predated by an election. If contracts of previous governments tie newly elected governments, governments end up being unable to resist renegotiation. If previous contracts do not bind new governments and taxation has a crowding-out effect, a ratchet effect occurs which is similar, but not identical to the standard ratchet effect which is due to intertemporal non-commitment. Surprisingly, social welfare may be higher in the latter case.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://userpage.fu-berlin.de/%7Elsbester/papers/d1997_34.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Departmental Working Papers in its series Papers with number 002.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation:
Date of revision:
Handle: RePEc:bef:lsbest:002

Contact details of provider:

For technical questions regarding this item, or to correct its listing, contact: (XXX).

Related research
Keywords: political economy; endogenous limited commitment; renegotiation; short run contracts;

Find related papers by JEL classification:
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
K20 - Law and Economics - - Regulation and Business Law - - - General

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
Full references

Statistics
Access and download statistics

Did you know? Use the JEL tree to browse through the database by subfields.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.