Efficient Regulatory Mandates∗
نویسندگان
چکیده
This paper shows why, under incomplete information, regulatory practices that alter market prices can redistribute resources more efficiently than cash transfers. In our model the representative citizen cares about a project that benefits a special interest. An example of such a project is the adoption of accessibility devices regulated by the American with Disabilities act. The project can be funded either by transfering cash to the special interest, or by mandating businesses to bundle the project with the goods they are selling. When the cost of the project is unknown to the citizen, the cash transfer may involve overpayments that make mandates more efficient despite the associated deadweight loss.
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