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

Emerging issues affecting the role of government, Probelm 1: (a) What ...

Probelm 1: (a) What are the main roles of Government in the economic development of a country? (b) What are some of the emerging issues affecting the role of Government?

Capitalist price, Explain how the price system answers the five fundamental...

Explain how the price system answers the five fundamental questions of economics, and talk about at least two of the short-comings of the capitalist price and market system.

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

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

Private & public goods, what do you understand by private & public goods. D...

what do you understand by private & public goods. Distinguish between private and public goods.

Example on uncertainty and the policy process, Q. Example on Uncertainty an...

Q. Example on Uncertainty and the policy process? For example, if it is expected that current government will be replaced in upcoming election, and the next government will be

Multinational, what is multinational? how can they help developing economie...

what is multinational? how can they help developing economies?

Public Debt, How burden of public debt is transferred to future generations...

How burden of public debt is transferred to future generations through reduced capital formation?

Valuation tools - travel cost method, Valuation Tools - Travel Cost Method ...

Valuation Tools - Travel Cost Method Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Aspects of environmental functions, Normal 0 false false fa...

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