ABSTRACT
Economists often propose policies such as greater consumer choice, more competition and free trade, all of which are designed to make people better off. Yet actual policy changes often involve substantial departures from the economists' recommendations from their ideal world. Industries are protected by regulations and tariffs, privatisation transfers monopolies from the public to the private sector, and defence equipment is often bought from higher-cost domestic firms. Why do governments frequently fail to exploit obvious opportunities for increasing society's welfare and making people better off? One possible explanation arises in the political market place where policy choices are made and implemented and which economists have traditionally regarded as a ‘black box’, so neglecting an important area of decision-making.
