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

Cost-based methods - relocation cost, Normal 0 false false ...

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

distinguish between occupancy rate, In the context of hospital care, expla...

In the context of hospital care, explain and distinguish between occupancy rate, capacity, and utilization.

Decision process - welfare economics, One shortcoming of neoclassical welfa...

One shortcoming of neoclassical welfare economics is that it does not take into account the institutional structure of collective decision making. To draw normative conclusions abo

Policy processes, Explain the stages and various coordination mechanisms in...

Explain the stages and various coordination mechanisms involved in policy processes. Discuss various factors that influenced the agenda setting in policy processes.

Policy composition and policy reversal, Let us now consider a situation in ...

Let us now consider a situation in which we know the timing of a change in policy but are unsure about the composition of the future policy. The association of different policy co

Related goods approaches - indirect substitute approach, Related Goods Appr...

Related Goods Approaches - Indirect Substitute Approach Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInter

Nations of the commonwealth, The international monetary fund and the World ...

The international monetary fund and the World Bank are the main lending financial institutions that give assistance to developing nations in the restoration of their economy. Wh

Extensions of the sna-type systems, Normal 0 false false fa...

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

Fiscal policy, What are objectives of fiscal policy

What are objectives of fiscal policy

Similarities between physical capital and natural capital, 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