cover image: Information Discovery for Industrial Policy

Information Discovery for Industrial Policy

1 Nov 2024

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.
political economy economic systems industrial organization corporate finance microeconomics other asset pricing development economics economics of information regulatory economics

Authors

Michael Sockin, Wei Xiong

Related Organizations

Princeton University
Acknowledgements & Disclosure
I don't have any relevant funding or financial relationships to disclose. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
DOI
https://doi.org/10.3386/w33107
Pages
44
Published in
United States of America

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