Political economy

Question 1

Define political economy under hackett

Answer 1

within microeconomics, political economy is an approach used to undestand how political an d legal institutions influence the economic behaviour of people, firms and markets, as well as economics of how interest groups influence the formation of laws and regulatory policy

Question 2

Define government failure

Answer 2

refers to the failure of policy makers to craft a regulatory intervention that would hypothetically enhance the market efficiency.

Question 3

What are the functions studied when analyzing the process of political economy?

Answer 3

Policies as function of
- optimizing rational choice behaviour by the policy-makers
- Behaviour modified by incentives from various sources

Question 4

What is the capture theory of regulation by stigler

Answer 4

Stigler argues that