These information imperfections create scope for rent-seeking, which results in both an allocative inefficiency – in the sense that the policies pursued do not reflect underlying preferences – and in productive inefficiency, in that policy objectives are pursued at higher than efficient cost. While the conventional prescription for reducing vulnerability to rent-seeking is to insulate the policy process from interest group pressures, this conflicts both with effective accountability and with the need for policy to adjust to changes in preferences, information and choice sets. Further aggravating the difficulties is the inherent conflict between this need for policy adaptability on the one hand, and the contribution policy credibility and stability can make to the efficiency of policy on the other. These three elements of the institutional design dilemma – limited information, rent-seeking, and costly commitment – define a world where there are no solutions but only trade-offs. Click the link below to view the paper.

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PC_Presentation_20_Aug_final.pdf

The Garnaut report's trouble is it costs the problem but not the solution, observes Henry Ergas.

DEMOCRACY, as Arthur Balfour said, is 264 by explanation: but the explanations must be good ones. The Garnaut report was to explain the basis for the 264's climate change policy. Unfortunately it leaves open more quest than it answers.

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A_case_where_the_climate_cure_is_more_costly_than_the_disease.pdf

Reducing emissions is not a moral play, it is a trade of costs and benefits, argues Henry Ergas.

A FANATIC, George Santayana famously said, is someone who redoubles his effort when he has forgotten his aim. With July shaping up as climate change policy month, a good dose of fanaticism seems likely to come our way.

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Beware_green_zealots.pdf