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

Theory of environmental policy, Normal 0 false false false ...

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

Economic foundations of law, Mr. X enters into a contract with Mr. Z under ...

Mr. X enters into a contract with Mr. Z under which Z agreed to build a customized telescope for X for $500. The value of the completed telescope to X will be $600. Expecting that

Discuss the forces impacting on good governance, Question: (a) There ap...

Question: (a) There appears to be an emerging consensus that the movement towards good governance must include initiatives to strengthen the institutions of government and civi

Economic growth and world trade, The major economies in the world are in a ...

The major economies in the world are in a deep recession although there are some signs of growth. What implications has such a recession had for international business? How have go

Valuation tools, Normal 0 false false false EN-IN X-N...

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

Describe the rational model of public policy, Problem: (a) What do you ...

Problem: (a) What do you meant by public policy? What does the study of public policy involve? (b) How are problems that might lead to public policy identified and defined?

Financial deregulation - regulations and competition policy, Consider a cas...

Consider a case, if an insurance company merges with a bank. We know that insurance company bears risk for insurers. Suppose, after merger, bank gets in some trouble for reasons ot

Examine essential elements of modern democratic societies, Question 1: ...

Question 1: Examine the essential elements of modern democratic societies. Question 2: State the various ways in which the participation of people is achieved in a demo

Difference in natural resources and other tangible assets, Normal 0 ...

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

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