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mix of policies


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The use of policy instruments in combination. If a government has only one objective, it may be possible to achieve it using only one policy instrument. If more than one policy instrument is available, a mix of policy instruments can achieve an outcome that is no worse and will almost always be better. If the government has more than one objective, at least n independent policy instruments are needed to allow n separate objectives to be obtained. This, too, dictates using a mix of policy instruments. If more than n instruments are available, a mix can again do no worse. Using a mix of policy instruments means that each instrument can be smaller. For example, a number of low tax rates can be applied to a broad base rather than one high tax rate to a narrow base. This can have the advantage of mitigating undesirable side-effects.

Subjects: Economics.


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