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on Positive Political Economics |
| By: | Amihai Glazer (Department of Economics, University of California-Irvine) |
| Abstract: | 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. |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050621&r=pol |
| By: | Michelle R. Garfinkel (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine); Constantinos Syropoulos (Department of Economics and International Business, Drexel University) |
| Abstract: | We examine how globalization affects trade patterns and welfare when conflict prevails domestically. We do so in a simple model of trade, in which a natural resource like oil is contested by competing groups using real resources (“guns”). Thus, conflict is viewed as ultimately stemming from imperfect property-rights enforcement. When comparing autarky with free trade in such a setting, the gains from trade have to be weighed against the possibly higher resource costs of conflict. We find that importers of the contested resource gain unambiguously. By contrast, exporters of the contested resource lose under free trade, unless the world price of the resource is sufficiently high. Regardless of what price obtains in the world market, countries tend to over-export the contested resource relative to what we would observe if there were no conflict; for some range of prices, the presence of conflict even reverses the country’s comparative advantage. For an even wider range of prices, an increase in the international price of the contested resource reduces welfare, an instance of the “natural resource curse.” |
| Keywords: | Globalization; Trade openness; Property rights; Enforcement; Insecurity; Civil wars |
| JEL: | D30 D70 D72 D74 F2 F10 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050601&r=pol |
| By: | Michelle R. Garfinkel (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine) |
| Abstract: | In this chapter, we review the recent literature on conflict and appropriation. Allowing for the possibility of conflict, which amounts to recognizing the possibility that property rights are not perfectly and costlessly enforced, represents a significant departure from the traditional paradigm of economics. The research we emphasize, however, takes an economic perspective. Specifically, it applies conventional optimization techniques and game-theoretic tools to study the allocation of resources among competing activities— productive and otherwise appropriative, such as grabbing the product and wealth of others as well as defending one’s own product and wealth. In contrast to other economic activities in which inputs are combined cooperatively through production functions, the inputs to appropriation are combined adversarially through technologies of conflict. A central objective of this research is to identify the effects of conflict on economic outcomes: the determinants of the distribution of output (or power) and how an individual party’s share can be inversely related to its marginal productivity; when settlement in the shadow of conflict and when open conflict can be expected to occur, with longer time horizons capable of inducing conflict instead of settlement; how conflict and appropriation can reduce the appeal of trade; the determinants of alliance formation and the importance of intra-alliance commitments; how dynamic incentives for capital accumulation and innovation are distorted in the presence of conflict; and the role of governance in conflict management. |
| Keywords: | Anarchy; Bargaining; Conflict technology; Economic growth; Exchange; Governance; Group formation; Open conflict; Power; Shadow of the future |
| JEL: | D30 D70 D72 D74 H56 O17 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:050623&r=pol |