The Dynamics of a Policy Outcome: Market Response and Bureaucratic Enforcement of a Policy Change

Dana Foarta, Steven Callander and Takuo Sugaya

No 17556, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Policy outcomes are determined not by the words in a statute but by the actions induced in response. Whether a policy succeeds or fails depends on how policy shapes behavior and how that behavior, in turn, shapes the future course of policy. To understand this process, we develop a model that explicitly combines the political and non-political domains, focusing on competition policy and the regulation of markets. We show how the outcome of a change in policy develops over time as firms respond in the market and interact with bureaucratic enforcement. We identify a critical threshold in market structure that determines whether a policy succeeds or fails, and discuss how the design of political institutions can affect this level. The threshold represents a balancing of the path-dependence of politics with the self-correcting nature of markets. It establishes when political forces dominate those in markets and, thus, when a policy change will have a lasting effect on society.

Date: 2022-10
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17556 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:17556

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17556

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().