ACEMOGLU, Daron
Inefficient redistribution - 2001
There are many well-developed theories that explain why governments redistribute income, but very few can explain why this often is done in a socially ineffienct form. In the theory we develop, compared to efficient methods, inefficient redistribution makes it more attractive to stay in or enter a group that receives subsidies. When political institutions cannot credibly commint to future policy, and when the political influence of a group depends on its size, inefficient redistribution is a toll to sustain political power. Our model may account for the choice of inefficient redistributive policies in agriculture, trade, and the labor market. It also implies that when factors of production are less specific to a sector, inefficient redistribution may be more prevalent
Inefficient redistribution - 2001
There are many well-developed theories that explain why governments redistribute income, but very few can explain why this often is done in a socially ineffienct form. In the theory we develop, compared to efficient methods, inefficient redistribution makes it more attractive to stay in or enter a group that receives subsidies. When political institutions cannot credibly commint to future policy, and when the political influence of a group depends on its size, inefficient redistribution is a toll to sustain political power. Our model may account for the choice of inefficient redistributive policies in agriculture, trade, and the labor market. It also implies that when factors of production are less specific to a sector, inefficient redistribution may be more prevalent
