Redistributive politics and economic efficiency

Avinash Dixit, John Londregan

Research output: Contribution to journalArticlepeer-review

194 Scopus citations

Abstract

The political process often compensates the losers from technical change or international competition in an economically inefficient way, namely by subsidizing or protecting declining industries instead of encouraging the movement of resources to other more productive uses. We find that a dynamic inconsistency in the game of redistributive politics contributes to this outcome. To achieve economically efficient outcomes, it is necessary that those making economically inefficient choices not be given offsetting transfers. But the political process distributes income on the basis of political characteristics, which are in general different from the economic characteristics that are rewarded by the market. We identify circumstances in which the inefficient choosers have desirable political characteristics and are therefore immune from threats of having to face the economic consequences of their choices.

Original languageEnglish (US)
Pages (from-to)856-866
Number of pages11
JournalAmerican Political Science Review
Volume89
Issue number4
DOIs
StatePublished - Dec 1995

All Science Journal Classification (ASJC) codes

  • Sociology and Political Science
  • Political Science and International Relations

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