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Structural Reforms Without Prejudices$
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Tito Boeri, Micael Castanheira, Riccardo Faini, and Vincenzo Galasso

Print publication date: 2006

Print ISBN-13: 9780199203628

Published to Oxford Scholarship Online: May 2007

DOI: 10.1093/acprof:oso/9780199203628.001.0001

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Divide and Conquer

Divide and Conquer

(p.206) 11 Divide and Conquer
Structural Reforms Without Prejudices

Tito Boeri (Contributor Webpage)

Micael Castanheira

Riccardo Faini

Vincenzo Galasso (Contributor Webpage)

Giorgio Barba Navaretti

Carcillo Stéphane

Jonathan Haskel

Giuseppe Nicoletti

Enrico Perotti

Carlo Scarpa

Lidia Tsyganok

Christian Wey

Oxford University Press

This chapter considers instances in which widening the political base for reform may still be desirable, but is practically unfeasible. This scenario typically emerges when the benefits from reform are dispersed among many economic agents, postponed to future generations, or are highly uncertain — as, for example, with the liberalization of a ‘strategic’, traditionally highly regulated market — where costs are highly visible and relatively concentrated. Since buying out the opposition of vested interests is too costly or would largely limit the scope for reform, policy-makers must resort to a different strategy. The recipe adopted by successful policy-makers — particularly when liberalizing nonmanufacturing industries — is to ‘divide and conquer’. This strategy aims at disentangling entrenched vested interests by concentrating the costs of the reform on particular groups.

Keywords:   reform, liberalization, economic scenarios, economic agents, policy-makers

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