- Logrolling - The process by which legislators trade votes
- . Administrators (bureaucrats) may seek to advance their power and budget authority. Regulated entities may seek to obtain Barriers To Entry or other special provisions of the law that reduce competition, increase subsidization, or both.
- Pork Barrel Spending - The tendency by legislators to encourage government spending in their own constituencies, whether or not it is efficient or even useful. Senior legislators, with greater status and ability to "bring home the bacon", may be reelected for this reason, even if their policy views are at odds with their constituency.
- Short time horizons - The tendency to fixate on short term fixes and to ignore large, complex problems. This may be driven to the election cycle. See, for example, "Political cycles in nontraditional settings: theory and evidence from the case of Mexico", Grier and Grier, ''JLE'' vol. XLIII (April 2000), p. 239.
- Rational Ignorance - because there are monetary and time costs associated with gathering information, and the benefits to doing so is limited, voters will not necessarily obtain all of the information necessary to make an informed decision on a subject on which they may nonetheless cast a vote. This is as true for legislators as for private citizens.
- Regulatory Capture - The co-opting of regulatory agencies by members of or the entire regulated industry. Rent seeking and rational ignorance are two of the mechanisms which allow this to happen.
- Rent seeking - see above.
- Imperfect Information - Especially in Pigouvian application, gathering sufficient information is no easier for the regulatory agency than for individual actors
- Market distortion
- --- By tax structures - by organizing taxation in a particular way, investments may be directed so as to avoid those taxes even though the investments are inferior
- --- By regulatory ordering - mandating a particular solution may prohibit all other solutions, some of which may be superior
- --- By subsidization - by subsidizing particular goods, these may force other, nonsubsidized, but superior substitutes from the market
- --- Risk assumption - by promising to relieve risk-takers, the government encourages risk-taking whose benefits accrue to a minority while spreading the assumption of that risk across the populace. The Savings And Loan Crisis of the 1980s is one example; federal assumption of responsibility for the Mississippi River levee system, disaster relief, and Effect Of Hurricane Katrina On New Orleans is another.
- Environmental impact - Public support for roads lowers the cost of operating a vehicle; farm subsidies and programs like the Soil Conservation program encourage farmers to use fields which require more intense application of fertilizer and irrigation. Both of these have an adverse impact on the environment.
One type of government failure arises when a situation in which the Government Intervenes to correct for Externalities and ends up making things worse. Since government failures are pervasive in society, politicians usually have to choose between government failure and Market Failure .
For example, given a situation involving air Pollution (a negative externality), the government decides to make a subsidy for corporations that do not put chemicals into the air. Then, all the factories that were putting chemicals into the air instead add tons of toxic material to the water supply, destroying many sources of drinking water, and causing the death of some endangered species of fish.
- Grier, Robin M. and Grier, Kevin B., "Political cycles in nontraditional settings: theory and evidence from the case of Mexico", JLE vol. XLIII (April 2000), p. 239
- Kolko, Gabriel (1977), ''The Triumph of Conservatism'', The Free Press, ISBN 0029166500
- Kolko, Gabriel (1977), ''Railroads and Regulation, 1877-1916'', Greenwood Publishing Company, ISBN 0837188857
- Niskanen, William (1967), ''The peculiar economics of bureaucracy'', Institute for Defense Analyses, Program Analysis Division (1967), ASIN B0007H5TBG
- Niskanen, William (1971), ''Bureaucracy and Representative Government'', Aldine, Atherton, ISBN 0202060403
|
