Demand and Supply Curves in Political Markets : Understanding the Problem of Public Goods and Why Governments Fail Them

Khemani, Stuti

World Bank, Washington, DC

关键词: PUBLIC GOODS;    POLITICAL ECONOMY;    INSTITUTIONS;    NORMS;    PREFERENCES;   

DOI  :  10.1596/1813-9450-8213
RP-ID  :  WPS8213

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper brings the economic tools ofdemand and supply curves to better understand how politicalmarkets shape the selection of government policies. It doesso to tackle a problem at the intersection of politicalscience and economics: government failure to pursue policieson the basis of sound technical evidence. Too often, theleaders who wield policy-making power within governmentsdeliberately and knowingly ignore sound technical advice, orare unable to pursue it despite the best of intentions,because of political constraints. The paper shows how theprevailing dominant explanation for suboptimal policies andweak institutions, of special interest and elite capture,can be understood as the selection of a point on thepolitical demand curve by oligopolistic politicalcompetition. Further, it shows how elite capture is only oneof many possible outcomes, and is endogenous to preferencesand beliefs in society. Preferences in society for publicgoods (or the lack thereof), and beliefs about how othersare behaving in the public sector, are the primitive orfundamental elements driving the shapes of political demandand supply curves and thence the selection of publicpolicies and institutions. This framework highlights theneed for future research to understand where politicalpreferences and beliefs come from, which is essential to thedesign of institutions that address problems of public goods.