Crowding Out Wasteful Activities by Wasteful Activities

A seller can benefit from information about the valuation a potential buyer places on the good. Under some circumstances, improved information raises social welfare. But under other circumstances, the information has private value but no social value, so that agents may spend too much on collecting information. A government which collects and disseminates some information about valuations can limit spending by private agents on data collection, thereby increasing social welfare. That is, governmental provision of information may be useful not because information is socially useful, but because it limits the amount private agents spend on collecting information.Information; Rent seeking

Strategies of the Political Opposition

I consider the strategies that an opposition party can use against an incumbent party which controls the government. The focus is on strategies when citizens vote retrospectively (so that the incumbent's chance of winning re-election increases with his performance), and when citizens compare the estimated abilities of the candidates. In both cases, the equilibrium may have the opposition vote against all policies the government proposes.Political opposition; Reputation; Retrospective voting; Policy implementation

Predicting Committee Action

Success of a policy often requires both that a good policy be adopted, and that the public or firms correctly anticipate what policy government will adopt. This paper models a relation between committee size and the effectiveness of policy, with a focus on how the accuracy of the public’s expectations varies with the size of the governmental committee setting policy. The paper also argues that the demand for access by special interest groups may arise not from a desire to influence policy, but from a desire to learn about government’s likely actions.

Reducing Current Taxes to Raise Future Revenue

A government which raises taxes in the current period may induce workers to invest in finding ways to reduce their tax payments, and so may reduce the government's ability to raise revenue in the future. Therefore, a government that fears it may have to raise much revenue in the future may set taxes in the current period at a lower level than that which would maximize revenue, or that would maximize social welfare in that period.Tax evasion; Intertemporal taxation

Appropriation, Human Capital, and Mandatory Schooling

Reduced inequality in human capital may reduce appropriationfrom the rich. They may therefore favor policies such as incometransfers and mandatory schooling which equalize human capital.Comparing several such policies, we find that mandatory schooling leads to higher incomes for both the rich and the poor, and increases the welfare of all. Moreover, it is the optimal policyfor the rich, even when they fully pay for the education.

Capital-Intensive projects induce more effort than labor-intensive projects.

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials. a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.

Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials--a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.Federalism; Capital subsidies; Transit subsidies

Capital-intensive projects induce more effort than labor-intensive projects

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials. a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.

Reducing rent seeking by providing wide public service.

A winning coalition which sets policy cannot always ensure that members of the coalition will be the ones getting benefits. Different jurisdictions (including members of the winning coalition) may then engage in costly rent seeking. Maximizing the welfare of the winning coalition may therefore require providing services to jurisdictions which are not members of the winning coalition, thereby reducing rent seeking by members of the winning coalition. The paper shows how this mechanism can generate insuffcient supply of public services, and offers another explanation for the use of co-funding requirements by the central government.

Informational benefits of international environmental agreements.

Given the difficulty of monitoring, and even more so of enforcing, International Environmental Agreements, it is surprising that they are signed and implemented. This paper offers a theoretical model, which addresses this issue. The focus is on informational and coordination problems. A country which is unsure about the benefits of environmental policy may find that the benefits are higher the greater the number of other countries which lean towards taking action. Whereas each country may individually take weak environmental action, in equilibrium several countries may take strong action if they expect others to. An International Environmental Agreement can thus be selfenforcing. Such effects can appear even if international environmental spillovers are absent, and even if monitoring and enforcement are infeasible. Our approach can explain additional phenomena: why a country known to care little about the environment may deeply influence other countries if it takes strong environmental action, why lags may appear between the signing of an agreement and its implementation, and how requirements for approval by several bodies within a country can increase support for environmental action.Environmental policy; International agreements; Signaling; Regulation;