Saturday, November 10, 2007


Many of my recent posts have probably seemed a little more formal than my normal analysis of the biotech industry, agriculture, and natural resource issues. However, I think they highlight important tools and concepts. Because the agriculture industry and the pattern of natural resource use can be heavily influenced by government policy, it is important to be able to analyze government behavior in a way that is precise. The tools and concepts developed by public choice economists allow us to do this. To review, some of the tools/concepts that I have recently discussed include the following:

TYPE TWO ERROR BIAS - overcautious behavior, ex: FDA drug approval, response to Hurricane Katrina

VOTING PARADOXES- randomness of election outcomes

MEDIAN VOTER THEOREM- leads to exploitation of minority by majority

TRAGEDY OF THE COMMONS – lack of property rights and pollution

COASE THEOREM – symmetry of environmental pollution, internalizing effect of property rights and markets

TRAGEDY OF THE ANTICOMMONS – underuse of resources due to excessive checks on power, bureaucracy. Ex: response to hurricane Katrina

KNOWLEDGE PROBLEM- government relies on a ‘shrunken’ pool of knowledge vs. markets

By clicking the ‘Public Choice’ link below, or under the ‘Selected Topics’ sidebar you can find more detailed discussions of each of these concepts.

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