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Title
A Possible Conflict between Economic Efficiency and Political Pressure
Fields of Research (FoR) 2008:
Author(s)
Publication Date
2005
Socio-Economic Objective (SEO) 2008
Abstract
A model of a production externality between two industries facing price uncertainty is specified and a Pigouvian tax introduced and solved using First-Order Conditions (FOC). This solution is then used as a baseline for comparison with results for the level of tax found using an Evolutionary Algorithm (EA) where government, as the policy setter, is facing political pressure in the selective environment of the electorate. It is found in the EA solution that if a government faces political pressure in an uncertain economic environment then the settings for the tax may reflect political caution rather than community preferences.
Publication Type
Journal Article
Source of Publication
Computational Economics, 26(1), p. 129-140
Publisher
Springer New York LLC
Place of Publication
United States of America
ISSN
1572-9974
0927-7099
Peer Reviewed
Yes
HERDC Category Description
Peer Reviewed
Yes
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