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Costs of change and political polarization

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  • Gersbach, Hans
  • Muller, Philippe
  • Tejada, Oriol

Abstract

We study a two-period model of policy-making where (i) changes of current policies impose costs on all individuals that increase linearly with the magnitude of the policy shift and (ii) political power changes over time. We show that policy polarization is minimal for intermediate marginal costs. In turn, welfare is a single-peaked function of the marginal cost. One interpretation is that societies with political institutions that impose positive but moderate costs on political reforms simultaneously achieve the highest welfare and the lowest policy polarization.

Suggested Citation

  • Gersbach, Hans & Muller, Philippe & Tejada, Oriol, 2019. "Costs of change and political polarization," European Journal of Political Economy, Elsevier, vol. 60(C).
  • Handle: RePEc:eee:poleco:v:60:y:2019:i:c:s0176268018303331
    DOI: 10.1016/j.ejpoleco.2019.06.002
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    Cited by:

    1. Hülya Eraslan & Kirill Evdokimov & Jan Zápal, 2020. "Dynamic Legislative Bargaining," ISER Discussion Paper 1090, Institute of Social and Economic Research, Osaka University.
    2. Charcon, D.Y. & Monteiro, L.H.A., 2020. "A multi-agent system to predict the outcome of a two-round election," Applied Mathematics and Computation, Elsevier, vol. 386(C).

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    More about this item

    Keywords

    Policy-making; Elections; Political polarization; Costs of change;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H4 - Public Economics - - Publicly Provided Goods

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