Abstract
Who watches the watchmen? In order to examine the role of the governance separation of powers principle in economics, we developed a theoretical model of a structurally failed market with and without political pressure. We conclude that if the executive branch is dedicated to its public duty, then the enforcement of a differential price policy yields an efficient resource allocation. However, if the executive branch attempts to balance its public duty against its personal interests, then the legislative and judicial branches should compel the executive branch to enforce a uniform price policy (seemingly an inefficient allocation, but one that ultimately reduces the public welfare loss) in order to safeguard the public's interests.
Original language | English |
---|---|
Article number | 100093 |
Journal | Journal of Government and Economics |
Volume | 12 |
DOIs | |
State | Published - 1 Dec 2023 |
Bibliographical note
Publisher Copyright:© 2023 The Author(s)
Keywords
- First-price menu auction
- Free-riding
- Political economy
- Protection for sale
- Regulatory policy
- Separation of powers principle
ASJC Scopus subject areas
- Economics and Econometrics
- Economics, Econometrics and Finance (miscellaneous)