Using and Abusing Economic Theory

Paul Klemperer

No 3813, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Economic theory is often abused in practical policy-making. There is frequently excessive focus on sophisticated theory at the expense of elementary theory; too much economic knowledge can sometimes be a dangerous thing. Too little attention is paid to the wider economic context, and to the dangers posed by political pressures. Superficially trivial distinctions between policy proposals may be economically significant, while economically irrelevant distinctions may be politically important. I illustrate with some disastrous government auctions, but also show the value of economic theory.

Keywords: Economic theory; Methodology; Auctions; Bidding; Auction theory; Spectrum auctions; Telecommunications; Umts; 3g; Mobile-phones (search for similar items in EconPapers)
JEL-codes: D44 L96 (search for similar items in EconPapers)
Date: 2003-03
New Economics Papers: this item is included in nep-hpe
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Citations: View citations in EconPapers (21)

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