Abstract.
What causes a government to adopt a new program or policy? Despite a large number of empirical studies available to date, the relative importance of various determinants remains obscure because of difficulties of statistical identification. We present an experimental setting to study the diffusion of policy innovations in the laboratory. Our approach discriminates between experimentation, experience, and emulation as determinants of policy adoption. The policy innovation we study is an internalization tax to mitigate a local market externality. Our results demonstrate the importance of information about innovations in other states in the diffusion of policy innovations.
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JEL Classification:
C9, D7, H7
Correspondence to: Rupert Sausgruber
We gratefully acknowledge financial support by the Austrian National Bank (Jubiläumsfonds under project no. 9134) and the Austrian Science Fund (FWF under project no. P17029). We are grateful for comments by Ernst Fehr, Simon Gächter, Simon Hug, Arno Riedl, Frans van Winden and seminar participants at the Universities of Amsterdam, Erfurt, and St. Gallen.
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Tyran, JR., Sausgruber, R. The diffusion of policy innovations -an experimental investigation. J Evol Econ 15, 423–442 (2005). https://doi.org/10.1007/s00191-005-0261-0
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DOI: https://doi.org/10.1007/s00191-005-0261-0