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Divide and Conquer

Tito Boeri, Carlo Scarpa, Lidia Tsyganok, Christian Wey, Micael Castanheira (), Riccardo Faini, Vincenzo Galasso, Giorgio Barba Navaretti, Stéphane Carcillo, Jonathan Haskel (), Giuseppe Nicoletti () and Enrico Perotti ()

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: This chapter considers instances in which widening the political base for reform may still be desirable, but is practically unfeasible. This scenario typically emerges when the benefits from reform are dispersed among many economic agents, postponed to future generations, or are highly uncertain - as, for example, with the liberalization of a 'strategic', traditionally highly regulated market - where costs are highly visible and relatively concentrated. Since buying out the opposition of vested interests is too costly or would largely limit the scope for reform, policy-makers must resort to a different strategy. The recipe adopted by successful policy-makers - particularly when liberalizing nonmanufacturing industries - is to 'divide and conquer'. This strategy aims at disentangling entrenched vested interests by concentrating the costs of the reform on particular groups.

Keywords: Economic agents; Economic scenarios; Liberalization; Policy-makers; Reform (search for similar items in EconPapers)
Date: 2007-05
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