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Inefficient Redistribution

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  • Acemoglu, Daron
  • Robinson, James A

Abstract

There are many well developed theories which explain why governments redistribute income. There are very few theories, however, which can explain why this redistribution often takes an inefficient form. In this paper we develop a theory of why redistribution is made inefficiently. Inefficient redistribution makes staying in or entering a group relatively more attractive than efficient methods of redistribution. The form of redistribution is therefore a tool to sustain political power in situations where; (1) the political influence of a group depends on its size, and (2) political institutions cannot credibly commit to future policy. We argue that the mechanism we propose may account for the choice of inefficient redistritive policies in agriculture, trade and the labor market.

Suggested Citation

  • Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers 2122, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2122
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    References listed on IDEAS

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    More about this item

    Keywords

    Democracy; Efficiency; Redistribution;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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