Class Notes (806,449)
Canada (492,253)
Commerce (698)
COMM 394 (10)

C394 - Mar 3 - Gov't and Gov't Failure (Cont.).docx

10 Pages
Unlock Document

University of British Columbia
COMM 394
Tony Boardman

Gerrymandering - practice that attempts to establish a political advantage for a particular party or group by manipulating district boundaries to create partisan advantaged districts Politicians and Responsibility - Goals? To do what is best for society, to take junkets overseas, to have power and prestige, to be wealthy o Primary goal: to be re-elected o Consequently… support policies that majority of people are supporting, spending money on campaigns, high discount rate (engage in projects that have short benefits)  E.g. reforestation (lots of money now, but benefits won’t rise till 70 years later) - Iclicker: 50 richest members of Congress have wealth of $1.6 billion; China’s People’s Congress – 50 richest has wealth of $95 billion. - GOVERNMENT - Not just single entity Assistant Deputy Minister - Point of contact to influence government - Deputy Minister - Direct bureaucracy What do Bureaucrats Want? - Power and prestige - Salaries, benefits, other perks (e.g. carpets, etc) - Shirk (avoid duty or responsibility)… lead “the quiet life” - Tenure (not going to be fired) Similar to business executives, there may e a principal-agent problem: - Principal: the Minister - Why might it be worse? Than in private sector? o Bureaucrats stay even if government changes o Not same measure of success (firms – make profit), but in government – not really clear o Affects everybody has stake, the public  Shareholders – achieve profit or you’re out; incentive to be involved  Here, free-riding problem may be worse Consequently they may: - Maximize their agency’s budget - Maximize slack - Unreasonably swayed by pressure groups Niskanen……………… Monopoly - Total benefit at Qc = total area under demand curve - Niskanen – politician “knows” Qc, but cannot observe MC. o Bureaucrat knows MC o Asks for (almost all of) ACQc0, then provides Qc. o This maximizes slack = ACPc Insights: bureaucracies - Have “market power” (even if output not priced) - Maximize slack = ACQc0 – PcCQc0: end up taking more of the consumer surplus than a private-sector monopolist - They get the slack: High salaries, perks, inefficiency, etc - Then what happens? o Cost will rise, x-inefficiency - Deciding whether or not government pays for drugs o Both cases, voted YES o But those with financial ties to industry – voted for (9:1) o On panel, but may be paid to vote, like working on another drug - Focusing on C – transfer - Transf
More Less

Related notes for COMM 394

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.