Political Economy and Industrial Policy

Jean‐Jacques Laffont

in Incentives and Political Economy

Published in print October 2001 | ISBN: 9780199248681
Published online November 2003 | e-ISBN: 9780191596575 | DOI:

Series: Clarendon Lectures in Economics

 Political Economy and Industrial Policy

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This chapter considers a variety of issues in industrial policy by modelling the trade‐off between informational rents and efficiency distortions. It is shown that political imperfections affect regulatory rules and that the ownership structure of firms matters. Price distortions and the rationale behind prohibiting price discrimination are analysed and the models are extended to include the possibility of lump sum transfers by the government.

Keywords: efficiency distortion; firms; industrial policy; informational rent; lump sum transfers; ownership structure; price discrimination; price distortion

Chapter.  10244 words.  Illustrated.

Subjects: Microeconomics

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