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Endogenous Public Policy, Politicization and Welfare

Author

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  • Gil S . Epstein
  • Shmuel Nitzan

Abstract

In the two-stage political-economic game that we study public policy is the outcome of the interaction between interest groups and a two-tier government. Implementation of a policy proposed by a bureaucrat requires approval by an elected politician. The objective function of the bureaucrat hinges on the weight assigned to social welfare relative to the rent-seeking outlays of the interest groups. This weight represents the degree of politicization of the government. Our main result is that, in contrast to common belief, increased politicization need not adversely affect the public well-being. Copyright Blackwell Publishing, Inc. 2002.

Suggested Citation

  • Gil S . Epstein & Shmuel Nitzan, 2002. "Endogenous Public Policy, Politicization and Welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(4), pages 661-677, October.
  • Handle: RePEc:bla:jpbect:v:4:y:2002:i:4:p:661-677
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    Citations

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    Cited by:

    1. Gil Epstein & Shmuel Nitzan, 2006. "Reduced prizes and increased effort in contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 26(3), pages 447-453, June.
    2. Gil S. Epstein & Shmuel Nitzan, 2002. "Politics of Randomness," CESifo Working Paper Series 803, CESifo Group Munich.
    3. Epstein, Gil S. & Nitzan, Shmuel, 2004. "Strategic restraint in contests," European Economic Review, Elsevier, vol. 48(1), pages 201-210, February.
    4. Epstein, Gil S. & Mealem, Yosef & Nitzan, Shmuel, 2011. "Political culture and discrimination in contests," Journal of Public Economics, Elsevier, vol. 95(1), pages 88-93.
    5. Gil S. Epstein & Ira N. Gang, 2016. "Taxation, social protection, and governance decentralization," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).
    6. Epstein, Gil S. & Mealem, Yosef, 2013. "Politicians, Governed vs. Non-Governed Interest Groups and Rent Dissipation," IZA Discussion Papers 7736, Institute for the Study of Labor (IZA).
    7. Gil S. Epstein & Shmuel Nitzan, 2006. "Effort and Performance in Public Policy Contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 265-282, May.
    8. Epstein, Gil S. & Gang, Ira N., 2002. "Government and Cities: Contests and the Decentralization of Decision Making," IZA Discussion Papers 547, Institute for the Study of Labor (IZA).
    9. Drook-Gal, Bat-Sheva & Epstein, Gil S. & Nitzan, Shmuel, 2004. "Contestable privatization," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 377-387, July.
    10. Gil S. Epstein & Yosef Mealem & Shmuel Nitzan, 2013. "Lotteries vs. All-Pay Auctions in Fair and Biased Contests," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 48-60, March.
    11. Gil S. Epstein & Shmuel Nitzan, 2005. "Size and distribution of prizes and efforts in contests," Economics Bulletin, AccessEcon, vol. 8(10), pages 1-10.
    12. Joan Esteban & Debraj Ray, 2011. "Linking Conflict to Inequality and Polarization," American Economic Review, American Economic Association, vol. 101(4), pages 1345-1374, June.
    13. Mazza, Isidoro & van Winden, Frans, 2008. "An endogenous policy model of hierarchical government," European Economic Review, Elsevier, vol. 52(1), pages 133-149, January.
    14. Gil Epstein & Yosef Mealem, 2015. "Politicians, governed versus non-governed interest groups and rent dissipation," Theory and Decision, Springer, vol. 79(1), pages 133-149, July.
    15. Marco Sorge, 2015. "Lobbying (strategically appointed) bureaucrats," Constitutional Political Economy, Springer, vol. 26(2), pages 171-189, June.
    16. Gil Epstein & Ira Gang, 2007. "Who Is The Enemy?," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 469-484.
    17. Boerner, Kira, 2005. "Having Everyone in the Boat May Sink it - Interest Group Involvement and Policy Reforms," Discussion Papers in Economics 730, University of Munich, Department of Economics.
    18. Yosef Mealem & Shmuel Nitzan, 2016. "Discrimination in contests: a survey," Review of Economic Design, Springer;Society for Economic Design, vol. 20(2), pages 145-172, June.
    19. Gil S. Epstein & Ira N. Gang, 2006. "Contests, NGOs, and Decentralizing Aid," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 285-296, May.
    20. Gil Epstein & Igal Milchtaich & Shmuel Nitzan & Mordechai Schwarz, 2007. "Ambiguous political power and contest efforts," Public Choice, Springer, vol. 132(1), pages 113-123, July.
    21. repec:elg:eechap:15325_4 is not listed on IDEAS
    22. repec:ebl:ecbull:v:8:y:2005:i:10:p:1-10 is not listed on IDEAS
    23. Gil S. Epstein & Shmuel Nitzan, 2005. "Lobbying and Compromise," CESifo Working Paper Series 1413, CESifo Group Munich.

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