Generic Policy Alternatives and Implementation

Market and Government Failure

• They rarely happen in isolation!!• So we need to check for a market failure and

then from there look for a government failure

Generic Policies

• Various types of policy solutions– General strategies and approaches– Must be tailored if they will be viable

• Book clearly demonstrates the market failures, government failures, or equity concerns that each generic policy most appropriately addresses, as well as the most common limitations and undesirable consequences associated with the use of each

Categorizations

• Freeing, facilitating, and simulating markets• Using taxes and subsidies to alter incentives• Establishing rules• Supplying goods through nonmarket

mechanisms• Providing insurance and cushions

Freeing, Facilitating, and Simulating Markets

• Deregulation• Legalization• Privatization• Allocating Existing Goods• Creation of New Marketable Goods– Cap-and-trade

• Simulating Markets– Cable television…what makes pricing efficient?

Using Taxes and Subsidies to Alter Incentives

• Supply-Side Taxes– Output taxes– Tariffs

• Supply-Side Subsidies– Matching grants– Tax expenditures

• Demand-Side Subsidies– In-kind subsidies– Vouchers– Tax expenditures

• Demand-Side Taxes– Commodity taxes– User fees

Establishing Rules

• Frameworks– Civil laws– Criminal laws

• Regulations– Price regulation– Quantity regulation– Direct information provision– Indirect information provision– Regulation of the circumstances of choice

Supply through Nonmarket Mechanisms

• Baumol’s disease• Direct supply by government bureaus– Leman’s list of domestic production functions (p. 249)

• Independent agencies– Government corporations– Special districts

• Contracting out– Direct– Indirect

Providing Insurance and Costs

• Insurance– Mandatory– Subsidized

• Cushions– Stockpiling– Transitional assistance– Cash grants

HALFTIME!

Factors Assessing Success and Failure of Implementation

• Is the underlying theory reasonable?– Characteristics and circumstances of adoption– Likely to be intrinsically un-implementable if we

cannot specify a logical chain of behaviors that lead to desired outcomes

• Does it build incentives to implement?– Sticks and carrots– Street-level bureaucrats– Monetary resources, realistic time frame, staff to

train, good information technology systems

Factors Assessing Success and Failure of Implementation

• Who has the essential elements to assemble?– The more numerous and varied the elements that

must be assembled, the greater is the potential for problems

– Implementation is a series of adoptions– Tokenism, delayed compliance, or blatant resistance

• Availability of fixers: Who will manage assembly?– Want implementers to see a purpose in policy– Policies do not implement themselves

Forward Mapping• Specifying and questioning chain of behaviors

that link policies to desired outcomes• Exactly what must be done by whom for desired

outcome to occur?• Dirty mindedness• Must be willing to make predictions• 1) Write the scenario• 2) Critique it (always be sure to consider the dogs

that didn’t bark)• 3) Revise it

Backward Mapping

• Begin thinking about policies by looking at the behavior that you wish to change

• Suggest alternative solutions and iteratively return to adoption

Uncertainty and Error• Since we do so much prediction, it is expected that we will

make errors• Duplication and overlap are often considered to be

inefficient…but they can make policies more feasible and robust– Explain this!

• How will we evaluate a program or policy?– What key questions should we be asking before choosing to

evaluate a policy?• What should we do about future termination?

– Hard to repeal without sunset provisions– Want to keep cost of termination to employees low…will lead to

less resistance

How to Respond to Heterogeneity

• We need to have flexibility and decentralization built in to reduce implementation failures– Allow self-selection• SF Neighborhood example

– Encourage capacity building– Use phases of implementation