Take Action

Home | Faculty & Research Overview | Research

Research Details

Gridlock and Inefficient Policy Instruments

Abstract

Policy makers may disagree on when intervention is appropriate, but they tend to agree as to what interventions are ine¢ cient. Nevertheless, when regulating international trade, food security, environmental protection, or redistribution, governments oftentimes intervene with inefficient instruments such as distortionary taxes and quotas. To understand this puzzle, we provide a model where the need for intervention varies over time and policy changes require the consent of more than one pivotal party. Intervening via an inefficient instrument makes repeal of the intervention more likely when the need for it decreases, and thus makes the less interventionist party more inclined to intervene in the first place. As a result, the beneficial "double dividend" associated with emission taxes makes them less likely to be politically acceptable. These effects are more pronounced in polarized and volatile environments.

Type

Working Paper

Author(s)

David Austen-Smith, Bard Harstad, Antoine Loeper

Date Published

2016

Citations

Austen-Smith, David, Bard Harstad, and Antoine Loeper. 2016. Gridlock and Inefficient Policy Instruments.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more

Take Action