Political Economy Aspects of Fuel Subsidies : A Conceptual Framework
While notoriously inefficient, fuel subsidies are widespread, and in many cases politically stable. This paper discusses and models various political economy aspects of fuel subsidies, focusing on gasoline and kerosene. Both economic and political...
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| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/03/17492714/political-economy-aspects-fuel-subsidies-conceptual-framework-political-economy-aspects-fuel-subsidies-conceptual-framework http://hdl.handle.net/10986/13190 |
| Summary: | While notoriously inefficient, fuel
subsidies are widespread, and in many cases politically
stable. This paper discusses and models various political
economy aspects of fuel subsidies, focusing on gasoline and
kerosene. Both economic and political are considered to
explain differences in subsidies, with particular focus on
democratic and autocratic governments. A political process
is modeled whereby a promise of low fuel prices is used in
democracies to attract voters, and in autocracies to
mobilize support among key groups. Subsidies to fuels are
viewed as either easier to observe, easier to commit to,
easier to deliver, or better targeted at core groups, than
other public goods or favors offered by rulers. Easier
commitment and delivery than for regular public goods can
explain the high prevalence of such policies in autocracies,
and also in young democracies where the capacity to commit
to or deliver complex public goods is not yet fully
developed. The analysis provides a framework for empirical
testing and verification. |
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