Are we Better Off if our Politicians Have More Information?

Johan Lagerlof

No 3884, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies a model of public policy with heterogeneous citizens/voters and two public goods: one (roads) is chosen directly by an elected policy-maker, and the other (pollution) depends stochastically on the amount of roads. Both a one-country and a two-country version of the model are analysed, the latter displaying externalities across the countries, which creates incentives for free-riding and strategic delegation. The welfare effects of providing the policy-maker with information about the relationship between roads and pollution are investigated, and it is shown that more information hurts some ? sometimes even all ? citizens. In particular, the opportunity not to build an institution for information gathering can serve as a commitment device for a country, although with the unfortunate effect of making the overall outcome even worse. Implications for the welfare effects of ?informational lobbying? are discussed.

Keywords: Public information acquisition; Value of information; Welfare; Interest groups; Informational lobbying; Strategic delegation (search for similar items in EconPapers)
JEL-codes: D78 (search for similar items in EconPapers)
Date: 2003-05
New Economics Papers: this item is included in nep-pol
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