Asymmetry and Corrective Public Policy in Contests
The proposal of an inefficient policy usually stimulates a political struggle between the affected interest groups. The resulting wasteful lobbying activities may reduce welfare, even if the proposed policy is not approved. In this paper we show that sufficient asymmetry in payoffs not only tends to reduce lobbying efforts in standard rent-seeking contests, as is well known, but it is, in fact, a necessary condition for the implementation of a successful effective corrective tax-transfer policy that complements the proposal of the inefficient policy. Such a policy induces an efficient equilibrium outcome which is, in addition, optimal from the viewpoint of the players that take part in the public-policy game. Copyright 2002 by Kluwer Academic Publishers
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:113:y:2002:i:1-2:p:231-40. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.