Title: Redistribution Policy - an overview | ScienceDirect Topics
Headings: Redistribution Policy
Redistribution Policy
The Middle Class Joins the Game
5.2 What does economic theory have to say?
Optimal Federalism
Redistribution, the Competition Problem, and Potential Incompatibilities
Inequality
Abstract
Welfare Reform
Active Distribution Policy
A General Equilibrium Model for Public Sector Analysis
Lump-Sum Redistributions
Deforestation
Global-Scale Influences
Handbook of Income Distribution
1.3.4.2 The Benefit Principle of Taxation
Handbook of Income Distribution
19.2 The Research Question and Methods to Explain Inequality and its Change
19.2.1 The Structure of the Research Question
19.2.2 Notes on the Arguments and Parts of the Grand Inequality Regression Equation (GIRE)
Preferential Trade Agreements
5.1.2 Nontraditional
5.1.2.1 Endogenous Trade Policy
5.1.2.2 Deeper Trade Policy Cooperation and Bargaining Externalities
5.1.2.3 Broader Economic Motives
5.1.2.4 Nonpecuniary International Externalities

Content: Fernandez and Rodrik show how uncertainty plays an additional role in maintaining the status quo ( Fernandez and Rodrik, 1991 ). They present a model in which a reform that would revoke privileges and openly benefit the greater part of society (it is supposed that all know this ex ante) cannot be approved because the individuals do not know exactly who the winners or losers will be. For example, when a country opens its market to international trade, companies do not know if they will be able to adapt to the new market conditions or if they will succumb to competition. They know that most will prosper, while others will fail, but they are unable to distinguish who will be part of which group. Fernandez and Rodrik show that uncertainty is enough to form a majority in favor of maintaining the status quo. This model also supposes that individuals are rational and there is no risk aversion or uncertainty as to the aggregate result of the reform. Add to the basic scenario all the additional real-life features, along with the costs of collective action for those who want to end privileges, and you have a scenario even more favorable to the preservation of the status quo. Mechanisms to create and preserve rents, once established, are able to perpetuate themselves. Since there are no means to credibly coordinate collective action to end rent seeking by each individual group, the best strategy is to try to increase the rent it extracts for itself, which results in an ever-increasing demand for rents and privileges made to the government. In this dispute, the groups with the advantage are those with the above mentioned attributes: