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

Fiscal policy, What are objectives of fiscal policy

What are objectives of fiscal policy

Factors for evaluating a policy instrument, Normal 0 false fa...

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

Economic literature policy instrumentation, In economic literature policy i...

In economic literature policy instrumentation has usually been discussed from normative point of view. In particular, the analytical apparatus of welfare theory is well equipped t

Usefulness of environmental accounting, Normal 0 false false ...

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

Pigovian approach, PIGOVIAN APPROACH   Pigou assumed  that  the aim  of...

PIGOVIAN APPROACH   Pigou assumed  that  the aim  of  social policy is  to  'promote welfare'. But  in order to simplifL  this, he chose to restrict the range of his inquiry to

#title.public debt.., what is public debt. ? give complate information on p...

what is public debt. ? give complate information on public debt. ?

Size maximizing, why-this-behavior-consistent-with-size-maximizing-governme...

why-this-behavior-consistent-with-size-maximizing-government

Environmental sustainability problem, Sustainability, more recently referre...

Sustainability, more recently referred to as ‘sustainable development', came from the idea of integrating economic development and environmental protection. The concept is based on

Valuation tool - production function approach, Normal 0 false ...

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

Complexity and the policy process, There has been a long history of researc...

There has been a long history of research on ‘the policy process' which is ‘closely connected to efforts to examine the nature of power in society and to specify the necessary cond

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