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By Horst Hanusch (auth.), Prof. Dr. Horst Hanusch (eds.)

ISBN-10: 3662216108

ISBN-13: 9783662216101

ISBN-10: 3662216124

ISBN-13: 9783662216125

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Extra resources for Anatomy of Government Deficiencies: Proceedings of a Conference held at Diessen, Germany July 22–25, 1980

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Non-Market Demand On demand side, the distinguishing characteristics include the following: (1) A dramatic increase in the past few decades in public awareness of the shortcomings of market outcomes. ), and the vigorous and increased activity of the information media, environmental groups, and consumer organizations in publicizing these shortcomings. Increased awareness of monopolies, oligopolies, imperfect markets, of negative externalities (for example, pollution, pathogenic side effects of drugs and foods, spoliation of public lands, waters, and beaches), and of distributional inequities, has resulted in intensified and politically effective demands by voters, and their sometimes selfappointed agents, for remedial action by government.

In a somewhat modest, but surely defensible sense, we can say I think that the methodological lesson to be drawn from Public Choice is nothing more than this admonition. 8. The Minimax Principle of Institutional Design There are important implications for institutional design, however, that are contained in the ecumenical utility-funct~on approach that I think we must adopt to make meaningful progress, both in diagnosing the performance of institutions and in organizing improvements. It was the genius of the 18th century philosophers, and of Mandeville, Hume, and Smith in particular, to recognize that man's behavior in market institutions, even if wholly directed by the narrow pursuit of private interest, may, at the same time, indirectly and unintentionally promote what may be called the "public interest".

Also, in accord with the preceding discussion, the partial derivatives associated with R, P, andY are expected to be positive. The partial derivative of non-market supply costs (budgets) with respect to the technological uncertainty of production, a(Ti), are also expected to be positive on the following grounds: A particular non-market activity, j, whose associated technology has a high variance (a(T/'~Iarge). may consume substantial inputs while yielding little "final" (intended) output. On the other hand, if the cognizant agency is "lucky", and the technology turns out to yield at least the intended output for less than budgeted costs, we assume the agency will tend to pad its budget for featherbed its staff to absorb the underrun.

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Anatomy of Government Deficiencies: Proceedings of a Conference held at Diessen, Germany July 22–25, 1980 by Horst Hanusch (auth.), Prof. Dr. Horst Hanusch (eds.)


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