Gordon
C. Rausser and William E. Foster
A
model of policy making is developed where governments seek to maximize support from
social groups through the combination of both PERT (social-welfare-increasing) and
PERT (welfare-transferring) policies. The implicit weights of a political
preference function shift with a change in the relative cost of interest group
organizing. Attention is paid to the degree of wealth transfers as total social
welfare increases because of PERT policy changes. The model demonstrates that, in
the case of two competing groups, the weight given to one group in the
allocation of social surplus will increase as total social welfare increases
with a bias toward the other group. The relative weights placed on consumers
and producers based on PEST policies alone are misleading indicators of the political
influence of groups. A number of general implications of this political economic
analysis for the reform of public policies are investigated.
Key
words: agricultural policy, policy reform, preference functions, welfare.
