Study Terms for Final Flashcards
Market Failure
Market doesn’t allocate a particular good efficiently
Public goods market failure
must have either non-rivalry or non-exludabilty for this to happen
What are the four traditional market failures?
public goods, externalities, natural monopolies, and information asymmatries
Private goods
excludable and rival
Public goods
non-excludable and non-rival
Externalities
any valued impact (postive/negative) resulting from action that affects someone who did not fully conset
Government failure
inability to aggregate preferances, lack of consideration for intensity, decentralized systems and inefficiency
Distributional concerns
what is being distributed and to whom
Lack of competitive framework
Thin markets
Rivalrous/non-rivalrous
excludability
rivalrous consumption
when you are consuming, no one else can
Excludable ownership
you can exclude people from it
Natural monoploy
when the average cost declines over the relevant range of demand
Search good
characteristics determined prior to purchase
Experience good
Characteristic after purchase
Post-experience good
hard to distinguish even after consumption
Thin markets
Only a few buyers and sellers
endogenous preferences
Cannot be taken as a given; shaped by rules, structures; cannot separate preferences from the policy
Risk
contingencies with known probabilities
Uncertainty
contingencies with unknown probabilities
social welfare values
human dignity, equality, etc. these are possible goals in addition to efficiency
Advocacy coalitions
learning and exogenous shocks lead to policy change through belief updating and revisions of commonly held beliefs among members of policy subsystems
Social construction
Analysts can use information and evidence to alter a given target population
Multiple streams
analysts can use evidence to open policy windows ; policy windows offer three streams: problem, policy, and politics
Punctuated equilibrium
Analysts should anticipate long periods of stasis in policy marking; occasionally be punctuated by brief, high impact change
Facilitating Markets
if a market is not already in existence, you cannot free it, which requires the process of facilitating the creation of a functioning market by either establishing property rights to existing goods and creating new marketable goods
Simulating markets
in some cases competition within the market is impossible by competition for the market is possible; solution: auctioning the right to provide the good
Supply side taxes and subsidies
address externalities, subsidies to increase the consumption of particular goods by reducing their price to final consumers, subsidies and personal deductions and credits
Demand side taxes and subsidies
demand-side subsidies aim at increasing the consumption of particular goods by reducing their price to final consumers; subsidies and personal deductions and credits
Rule establishment
Rules are often necessary even for the free market to work; Tort, contract, and anti-trust laws
Civil or criminal law
rules divided into these two categories
Regulations
Command and control, ban, direct and indirect information provision
Insurance
reduction of individual risk through pooling; problems: moral hazard, adverse selection; limited actuarial experience can lead to incomplete insurance markets; mandatory insurance to solve adverse selection problems
Kaldor-hicks criterion
A policy should be adopted only if those who will gain could fully compensate losers and still be better off
PRINCE analysis two conditions
- The outcome that you desire must be described in concrete terms
- PRINCE analysis focuses on changing behavior of other individuals in order to accomplish the desired outcomes
Four ways you can push to get your policy passed: Consensus
Easiest and most efficient; find compromises and agreements that can accomplish your goals within existing power, position, and salience; this carries the least cost because it involves the least change but it does require luck
Four ways you can push to get your policy passed: Limited Conflict
his is a strategy of “focused pressure” attempt to change the power, position, and/or salience of a limited number of players and push for a decision before the entire network becomes thoroughly involved
Four ways you can push to get your policy passed: Change the Power Distribution
If you cannot achieve your goals by applying discrete pressure at a few points, you might be able to achieve them by changing the power distribution of the network; this is always costly and always time-consuming and never easy, and few players have the patience and the strength to see it through but it is better than alternative four
Four ways you can push to get your policy passed: Unlimited Conflict
Raise the salience of every issue in the system; this will create possible opportunities for bargaining; it will also probably lead to stagnation because raising the salience of issues will highlight the differences among the players and make cooperation on anything more difficult; this strategy is rarely successful (although the threat of this strategy can be effective) and is highly unpredictable; because it destabilizes the affiliation matrix and the position matrix, it can also transform the power matrix in ways that would not have been predicted
Academic think tank
Driven by ideas, long term, future oriented, objective, neutral, hire well, published PhD’s “finding try to serve all of humanity”
Contract think tanks
RAND; driven by government contractor needs; neutral, well-published PhD’s
Advocacy think tanks
Heritage foundation(?); human rights watch; masters graduates and PhD’s not heavily published
Party think tanks
want to prove what they believe is right; staffed by former government officials and interest groups; Ex: Center for American Progress
