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Inefficient Redistribution

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Author Info
Acemoglu, Daron
Robinson, James A

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Abstract

There are many well developed theories which explain why governments redistribute income. There are very few theories, however, which can explain why this redistribution often takes an inefficient form. In this paper we develop a theory of why redistribution is made inefficiently. Inefficient redistribution makes staying in or entering a group relatively more attractive than efficient methods of redistribution. The form of redistribution is therefore a tool to sustain political power in situations where; (1) the political influence of a group depends on its size, and (2) political institutions cannot credibly commit to future policy. We argue that the mechanism we propose may account for the choice of inefficient redistritive policies in agriculture, trade and the labor market.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2122.

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Date of creation: Apr 1999
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Handle: RePEc:cpr:ceprdp:2122

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Keywords: Democracy Efficiency Redistribution

Other versions of this item:

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

Cited by:
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  1. Gerard Padro i Miquel, 2006. "The Control of Politicians in Divided Societies: The Politics of Fear," NBER Working Papers 12573, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Drazen, Allan & Limão, Nuno, 2003. "Government Gains from Self-Restraint: A Bargaining Theory of Inefficient Redistribution Policies," CEPR Discussion Papers 4007, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Pedro DalBo & Ernesto DalBo, 2004. "Workers, Warriors and Criminals: Social Conflict in General Equilibrium," Working Papers 2004-11, Brown University, Department of Economics. [Downloadable!]
  4. Robinson, James A & Verdier, Thierry, 2002. "The Political Economy of Clientelism," CEPR Discussion Papers 3205, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2006. "Emergence and Persistence of Inefficient States," NBER Working Papers 12748, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Richard Carson, 2002. "Competition, Economic Profit, and Political Capture," Carleton Economic Papers 02-09, Carleton University, Department of Economics. [Downloadable!]
  7. Keefer, Philip, 2004. "Elections, special interests, and the fiscal costs of financial crisis," Policy Research Working Paper Series 3439, The World Bank. [Downloadable!]
  8. Casamatta, Georges & De Paoli, Caroline, 2004. "Ex Post Inefficiency in a Political Agency Model," CEPR Discussion Papers 4275, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Sebastian M. Saiegh & Mariano Tommasi, 1999. "Why is Argentina’s Fiscal Federalism so Inefficient? Entering the Labyrinth," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 169-209, May. [Downloadable!]
  10. Jan Bruha & Delia Ionascu & Byeongju Jeong, 2005. "Organized Labor and Restructuring: Coal Mines in the Czech Republic and Romania," William Davidson Institute Working Papers Series wp773, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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