A political economy model of market intervention

Francisco Candel-Sánchez () and Juan Perote-Peña ()

Public Choice, 2013, vol. 157, issue 1, 169-181

Abstract: We argue that political competition based on income redistribution à la Lindbeck and Weibull (Public Choice 52:273–297, 1987 ) may cause distortive regulation in a competitive sector. For this purpose, we propose a model in which imposing a production quota allows the extraction of rents that are then used for vote-buying purposes. Our model permits us to analyze the response of regulatory policy to political factors, such as the size of a group of informed voters and the accuracy of their information about the incumbent. We also show that the extent of voter influence on policy outcomes is shaped by the state of market demand. In particular, if demand becomes weaker, market intervention increases in a magnitude that depends positively on the electoral weight of informed voters. Copyright Springer Science+Business Media, LLC 2013

Keywords: Regulatory policy; Political competition; D72; D82; D86; G38; L51 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1007/s11127-012-9933-0 (text/html)
Access to full text is restricted to subscribers.

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:kap:pubcho:v:157:y:2013:i:1:p:169-181

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/s11127-012-9933-0

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().