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| Mittenzwei, Klaus; Bullock, David S.; Salhofer, Klaus; Kola, Jukka. |
| Positive political economy is usually concerned with economic explanations of observed policy choices, while the timing of a policy reform has not gained similar attention. This is somewhat surprising since policy makers most often are free to decide both the design and timing of a policy reform. Drawing on insights from recent developments in the finance literature on investment under uncertainty, here we apply the idea of option value to the analysis of government policy making. Common political-economic explanations of the 1992 CAP reform are that policymakers felt domestic political pressure to make the CAP more efficient, and also international political pressure and to bring the CAP in line with treaty obligations. Although these arguments are sound,... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agricultural and Food Policy. |
| Ano: 2009 |
URL: http://purl.umn.edu/50957 |
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| Mittenzwei, Klaus. |
| This paper is concerned with the timing of an agricultural policy reform under uncertainty. The focus is on the opportunity cost of giving up the option to wait when implementing a policy reform. Including the option value in applied policy analysis can help explain why conventional analyses may find observed policies to be Pareto-inferior. Furthermore, it explains why otherwise profitable policy reforms may be delayed. The theoretical model is applied to Norwegian agricultural policy anticipating a prospective WTO agreement. It is argued that the option value should be incorporated into applied policy analysis when high uncertainty prevails. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Option value; Policy reform; WTO; Norway; Uncertainty; International Relations/Trade; C61; D78. |
| Ano: 2002 |
URL: http://purl.umn.edu/24875 |
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