Generate QR code
Open Access
Subscription Access
Government Failures: Theory and Policy
https://doi.org/10.32609/0042-8736-2012-12-4-30
Abstract
The article deals with the evolution of approaches to the problem of “government failures”. This trend of modern economic theory, which has arisen in opposition to the concepts of “market failures” can be seen as a search for a new strategy of political and economic analysis of the resource allocation mechanisms, as well as historical social institutions and their effect on the efficiency of economic processes. Special attention is paid to the problem of information retrieval, ways of funding the state, the impact of rent‑seeking behavior, the role of the political process, negative externalities as a result of the lack of coordination, and of the overall presence of the state in the economy. Interdisciplinary approach to “government failures” takes into account the influence of legal rules and institutions on the nature of allocation of public resources, as illustrated by the examples of modern Russian economy.
Keywords
government failures,
public policy,
public choice,
allocational efficiency,
information,
privatization
JEL: B20; D02; D60; K40; L30; P20
About the Authors
A. Radygin
Gaidar Institute for Economic Policy, Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia)
Russian Federation
Russian Federation
R. Entov
Russian Academy of Sciences (Moscow, Russia)
Russian Federation
Russian Federation
References
1. Aristotle (1984). Works: in 4 vols. Vol. 4. Moscow: Mysl.
2. Kameron R. (2001). A Concise Economic History of the World from Paleolithic Times to the Present. 2nd ed. Moscow: ROSSPEN.
3. Quesnay F. (1960 [1774]). Selected Economic Works. Moscow: Sotsekgiz.
4. Locke J. (1988). Works: in 3 vols. Vol. 3. Moscow: Mysl.
5. Mueller D. (2007). Public Choice III. Moscow: HSE Publishing House.
6. Radygin A., Entov R., Apevalova E. et al. (2008). Market Discipline and Contracts: Theory, Empirical Analysis, Law. M.: IEPP.
7. Radygin A., Entov R., Apevalova E. et al. (2009). Internal Mechanisms of Corporate Governance. Moscow: IEPP.
8. Radygin A., Simachev Yu., Entov R. (2011). State and Denationalization: Risks and Limitations of the “New Privatization Policy” // Voprosy Ekonomiki. No 9. P. 4—26.
9. Simachev Yu., Yakovlev A., Danilov Yu. (2009). The Russian Corporation: Models of Behavior during the Crisis // Voprosy Ekonomiki. No 6.
10. Smith A. (1962 [1776]). An Inquiry into the Nature and Causes of the Wealth of Nations: in 2 vols.). Moscow: Sotsekgiz.
11. Williamson O. (1996). The Economic Institutions of Capitalism. St. Petersburg: Lenizdat.
12. Hayek F. (2006). Law, Legislation and Liberty. Moscow: IRISEN, Mysl.
13. Yasin E. (2002). Burden of the State and Economic Policy // Voprosy Ekonomiki. No 11. P. 4—30.
14. Acemoglu D. (2003). Why Not a Political Coase Theorem? // Journal of Comparative Economics. Vol. 31. P. 620—652.
15. Acemoglu D. (2007). Modeling Inefficient Institutions // Advances in Economic Theory. Proceedings of the World Congress 2005. Cambridge, MA: Cambridge University Press. P. 341—380.
16. Acemoglu D. (2009). Introduction to Modern Economic Growth. Princeton, NJ: Princeton University Press.
17. Acemoglu D., Golosov M., Tsyvinski A. (2008a). Markets versus Governments // Journal of Monetary Economics. Vol. 55. P. 159—189.
18. Acemoglu D., Golosov M., Tsyvinski A. (2008b). Political Economy of Mechanisms // Econometrica. Vol. 77. P. 619—642.
19. Alesina A., Roubini N., Cohen G. (1997). Political Cycles and the Macroeconomy. Cambridge, MA: MIT Press.
20. Alesina A., Tabellini G. (2007). Bureaucrats or Politicians? // American Economic Review. Vol. 97. P. 169—179.
21. Alesina A., Tabellini G. (2008). Bureaucrats or Politicians? II // Journal of Public Economics. Vol. 92. P. 426—447.
22. Arrow K. (1963 [1951]). Social Choice and Individual Values. 2nd ed. New Haven, CT: Yale University Press.
23. Arrow K. (1971). Political and Economic Evaluation of Social Effects and Externalities // Frontiers of Quantitative Economics. Amsterdam: North Holland.
24. Baland J.-M., Moene K., Robinson J. (2010). Governance and Development // Handbook of Development Economics. Vol. 5. Ch. 69. N.Y.: Elsevier.
25. Banerjee A. (1997). A Theory of Misgovernance // Quarterly Journal of Economics. Vol. CXII, No 4. P. 1289—1332.
26. Blankart C. (2000). The Process of Government Centralization: A Constitutional View // Constitutional Political Economy. Vol. 11. P. 27—39.
27. Boettke P., Coyne C., Leeson P. (2007). Saving Government Failure Theory from Itself: Recasting Political Economy from an Austrian Perspective // Constitutional Political Economy. Vol. 18. P. 127—143.
28. Bozeman B. (2002). Public Value Failure: When Efficient Markets May not Do // Public Administration Review. Vol. 62, No 2. P. 145—161.
29. Buchanan J. (2008). Politics and Scientific Enquiry: Retrospective on a Half century // The Oxford Handbook of Political Economy. Oxford: Oxford University Press. P. 980—995.
30. Dinc I. (2005). Politicians and Banks: Political Influences on Government owned Banks in Emerging Markets // Journal of Financial Economics. Vol. 77. P. 453—479.
31. Djankov S., La Porta R., Lуpez-de-Silanes F., Shleifer A. (2003). Courts // Quarterly Journal of Economics. Vol. 118. P. 453—517.
32. Downs A. (1957). An Economic Theory of Democracy. N.Y.: Harper.
33. Gibbard A. (1973). Manipulation of Voting Schemes: A General Result // Econometrica. Vol. 41. P. 587—602.
34. Hurwicz L. (1986). On Informationally Decentralized Systems // Decision and Organization. 2nd ed. Amsterdam: North Holland. P. 297—336.
35. Jones C. (2005). Applied Welfare Economics. Oxford: Oxford University Press.
36. Krueger A. (1990). Government Failures in Development // Journal of Economic Perspectives. Vol. 4. P. 9—23.
37. La Porta R., Lоpez-de-Silanes F., Shleifer A., Vishny R. (1998). Law and Finance // Journal of Political Economy. Vol. 106. P. 1113—1155.
38. La Porta R., Lоpez-de-Silanes F., Shleifer A. (1999). Corporate Ownership around the World // Journal of Finance. Vol. 54. P. 471—517.
39. La Porta R., Lоpez-de-Silanes F., Shleifer A., Vishny R. (2000). Investor Protection and Corporate Governance // Journal of Financial Economics. Vol. 58. P. 3—27.
40. Laffont J-J., Tirole J. (1993). A Theory of Incentives in Procurement and Regulation. Cambridge, MA: MIT Press. Levitt S. (1998). Are PACs Trying to Influence Politicians or Voters? // Economics and Politics. Vol. 10. P. 19—35.
41. Lindahl E. (1919). Die Gerechtigkeit der Besteuerung. Lund: Gleerup. Teil I. S. 85—98.
42. Robinson J., Torvik R. (2005). A Political Economy Theory of the Soft Budget Constraint // CEPR Discussion Paper. No 5274.
43. Ross M. (2001). Does Oil Hinder Democracy? // World Politics. Vol. 53. P. 525—561.
44. Rothkopf M. (2007). Thirteen Reasons Why Vickrey—Clarke—Groves Process Is not Practical // Operation Research. Vol. 55. P. 191—197.
45. Samuelson P. (1954). The Pure Theory of Public Expenditures // Review of Economics and Statistics. Vol. 36. P. 387—389.
46. Satterthwaite M. (1975). Strategy Proofness and Arrow’s Conditions: Existence and Correspondence Theorems for Voting Procedures and Social Welfare Functions // Journal of Economic Theory. Vol. 10. P. 187—217.
47. Stiglitz J. (1998). Distinguished Lecture on Economics in Government: The Private Uses of Public Interests: Incentives and Institutions // Journal of Economic Perspectives. Vol. 12. P. 3—22.
48. Tideman T. (1997). Voting and the Revelation of Preferences for Public Activities // Perspectives on Public Choice. Cambridge: Cambridge University Press. P. 226—245.
49. Tollison R. (1997). Rent Seeking // Perspectives on Public Choice. Cambridge: Cambridge University Press. P. 506—524.
50. The Non Politics of Monetary Policy // The Oxford Handbook of Political Economy. Oxford: Oxford University Press. P. 523—544.
51. Luhmann N. (1964). Funktionen und Folgen formaler Organization. Berlin: Dunker und Humblot.
52. Myerson R. (1993). Effectiveness of Electoral Systems for Reducing Government Corruption: A Game Theoretic Analysis // Games and Economic Behavior. Vol. 5. P. 118—132.
53. Nordhaus W. (1975). The Political Business Cycle // Review of Economic Studies. Vol. 42. P. 169—190.
54. Paldam M. (1997). Political Business Cycles // Perspectives on Public Choice: A Handbook / D. Mueller (ed.). Cambridge: Cambridge University Press. P. 342—372.
55. Palfrey T. (2002). Implementation Theory // A Handbook of Game Theory. Amsterdam: North Holland. Vol. III. Ch. 64. P. 2271—2326.
56. Persson T. (2002). Do Political Institutions Shape Economic Policy? // Econometrica. Vol. 70. P. 883—905.
57. Pigou A. (1932). The Economics of Welfare. National Dividend. L.: Macmillan.
58. Tullock G. (1978). Welfare Effects of Sales // Maximization: Economic Inquiry. Vol. 16. P. 113—118.
59. Tullock G., Seldon A., Brady G. (2002). Government Failure: A Primer in Public Choice. Washington, DC: Cato Institute.
Review
For citations:
Radygin A., Entov R. Government Failures: Theory and Policy. Voprosy Ekonomiki. 2012;(12):4-30. (In Russ.) https://doi.org/10.32609/0042-8736-2012-12-4-30
Views:
2739
Email this article 
