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Endogenous Public Policy, Politicization and Welfare
Author(s) -
Epstein Gil S.,
Nitzan Shmuel
Publication year - 2002
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/1097-3923.00114
Subject(s) - welfare , government (linguistics) , public economics , economics , politics , outcome (game theory) , rent seeking , public policy , affect (linguistics) , social welfare , public administration , political science , microeconomics , market economy , law , economic growth , sociology , linguistics , philosophy , communication
In the two–stage political–economic game that we study public policy is the outcome of the interaction between interest groups and a two–tier government. Implementation of a policy proposed by a bureaucrat requires approval by an elected politician. The objective function of the bureaucrat hinges on the weight assigned to social welfare relative to the rent–seeking outlays of the interest groups. This weight represents the degree of politicization of the government. Our main result is that, in contrast to common belief, increased politicization need not adversely affect the public well–being.