Public Choice theory admits that both policymakers and bureaucrats have their self-interest and do not serve as pure instruments in maximizing social welfare function. This observation implies that

Question

Public Choice theory admits that both policymakers and bureaucrats have their self-interest and do not serve as pure instruments in maximizing social welfare function. This observation implies that

Answer

impose higher penalties for corruption.

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taxes should be raised to permit higher wages in the public sector so that policymakers have higher incentives to behave orderly.

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state failures can be even more harmful than market failures, which are considered as inevitable. However, the economy might work even with a minimal state which would, in turn, decrease the likelihood of state failures.

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there are not only market failures, but also state failures. However, their impact is limited.

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