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Are Two Economic Instruments Better Than One? Combining Taxes and Quotas under Political Lobbying

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  • Finkelshtain, Israel
  • Kan, Iddo
  • Kislev, Yoav

Abstract

Direct commands, market based, or combined, whichever is the government's mean of intervention, is expected to raise political lobbying and pressure. This study offers a political-economic model of an industry, which is regulated by an integrated system of both direct and market based policies. The model is used for a normative theoretical analysis and as a basis for a structural econometric framework. Exploiting a unique data set that describes the regulations of irrigation water in Israel during the mid eighties by means of quotas and prices, the political and technological parameters of the model are structurally estimated and used to assess the relative efficiency of quotas, prices and integrated regulation regimes.

Suggested Citation

  • Finkelshtain, Israel & Kan, Iddo & Kislev, Yoav, 2010. "Are Two Economic Instruments Better Than One? Combining Taxes and Quotas under Political Lobbying," Discussion Papers 93133, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    • Handle: RePEc:ags:huaedp:93133
    DOI: 10.22004/ag.econ.93133
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    Keywords

    Political Economy;

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