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Information Discovery for Industrial Policy

Author

Listed:
  • Michael Sockin
  • Wei Xiong

Abstract

Amid growing interest in industrial policy, we develop a model exploring the tension between market-driven information discovery and policymakers’ career incentives. While market-based information discovery can help address informational barriers faced by policymakers, career incentives may lead them to aggressively pursue their agendas to signal political capability, shifting dynamics toward a government-centric equilibrium. In this equilibrium, market participants focus on policy-related information over industry fundamentals, weakening the market’s role in information discovery and reducing policy efficiency. Our analysis highlights the importance of bureaucratic frictions and market-based information discovery in jointly shaping the effectiveness of industrial policy implementation.

Suggested Citation

  • Michael Sockin & Wei Xiong, 2024. "Information Discovery for Industrial Policy," NBER Working Papers 33107, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33107
    Note: AP CF DEV IO POL
    as

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    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
    • P0 - Political Economy and Comparative Economic Systems - - General

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