The political economy of policy instruments: The Left and collectively governed markets in Germany

Recent government interventions support the objectives of collective markets through public policy rather than relying on traditional strategic cooperation between non-state actors. We ask when and how left-wing governments intervene in collectively-governed markets. We develop a novel theoretical framework at the intersection of public policy and comparative political economy. We build on public policy scholarship to mobilize a typology of policy instruments available to governments to shore up collective markets, including regulation (sticks), subsidies (carrots), and information (sermons). We embed this hierarchical classification in a political economy framework to outline under which conditions we expect policymakers to opt for different instruments. We illustrate the usefulness of this approach through a case study of least likely policy areas – labor market and training policy – nested within a least likely case – Germany.