Regulation and Taxation: Analyzing Policy Interdependence
AbstractThe paper draws attention to the interdependence of regulation and taxation. We analyze the nature of policy equilibrium, as well as the implications of three historically important political and economic shocks, for the joint use of the two policy instruments in a framework that embodies relationships common in the literature on political economy. Regulation is represented by barriers to entry created by the government for a favored industry. Among the results are the following: the introduction of new methods of communication in politics, such as television advertising, leads to increased taxation of the average voter, greater entry barriers in private markets and greater resource use for campaign advertising, with the elasticity of supply in the regulated industry playing a crucial role. Growth in the labor force participation of women, on the other hand, lowers business tax rates, while resulting in more regulation and higher contributions of political resources. The paper concludes with a consideration of the efficiency of policy equilibrium and the analytical problems that arise in evaluating efficiency in such a context.
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Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 04-03.
Length: 33 pages
Date of creation: Mar 2004
Date of revision:
Publication status: Published: Carleton Economic Papers
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Find related papers by JEL classification:
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-04-25 (Accounting & Auditing)
- NEP-ALL-2004-04-25 (All new papers)
- NEP-REG-2004-04-25 (Regulation)
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.:
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"The Political Economy of Taxation,"
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