Explain ex-post heterogeneity, Public Economics

Assignment Help:

The other type is called ex-post heterogeneity which refer to the conflict (of interests) arising due to distributional implications of the public policy. Thus when a public policy has some distributional consequences, representative agents will be in conflict over distribution due to their respective "self interests". Ex-ante heterogeneity is important not only for distributive implications but also for understanding of the political aspects of the representative agents. It is also important in understanding of the time inconsistency problem of the policy process which arises when a policy maker maximizes welfare of a ‘representation agents'. In such situation, agents may, with respect to policy benefits, be identical ex-ante but are not identical ex-post.

Among non-political dimensions, we find markets being driven by heterogeneity but then the effects of heterogeneity are quite different. Further, in multiple agent welfare economics ex-ante and ex-post heterogeneity of agents is central to the analysis of optimal policy. Here it should be understood that welfare economics takes multi agent objective function as given, and weights the importance of heterogeneous agents for social welfare. Here ‘opinions' of different agents are taken as exogenous while determining the policy outcomes. Thus the focus of analysis remains only the calculations of optimal policy given the objective function.

In contrast, in public process, the main focus is often the endogenous determination of the objective which is maximized implicitly. Here weighs of the implied objective function are not exogenous. They are determined by the political process which in turn determines the outcome of the policy.


Related Discussions:- Explain ex-post heterogeneity

Uses of revised indicators of national wealth, Normal 0 false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Informal regulations on pollution, Normal 0 false false fal...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

OPTIMAL COMMODITY, State ramsey rule of optimal commodity taxation and the ...

State ramsey rule of optimal commodity taxation and the intuition for it

Condition of pareto optimality , reallocation of the resources from 1 effic...

reallocation of the resources from 1 efficient point to another efficient point that cause the production of x increase and production of y decrease hold the condition of contrect

Show the traditional decision analysis, Q. Show the Traditional decision an...

Q. Show the Traditional decision analysis? Traditional decision analysis rests on the key assumptions about the type of information available to the decision maker. Powerful B

Related goods approaches - barter exchange approach, Normal 0 f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Basic national accounts identities, Normal 0 false false fa...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Collectivist versus individualistic enforcement, It has been accepted to mo...

It has been accepted to most policy and development economists that among the most important sets of institution in an economy are those that provide for enforcement of contracts.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd