consider changing the agricultural policies only when the cost of
agricultural support becomes so large that ordinary taxpayers begin to be
concerned by the cost. What is required for a policy change, according to
this theory, is that those who lose become sufficiently aware of their
losses for this awareness to affect their voting behaviour.
Governments as Monopolists
Governments face the same problems of cost minimization that private
firms do but often operate in an environment in which they are monopoly
producers without shareholders. Large governments (provinces, big
cities, the federal government) face all of the organizational problems
faced by large corporations. They tend to use relatively rigid rules and
hence respond slowly to change. Building codes are an example of this
type of problem. Most local governments have detailed requirements
regarding the materials that must go into a new house, factory, or office
building. When technology changes, the codes often lag behind. For
example, plastic pipe, which is cheaper and easier to use than copper
pipe, was prohibited by building codes for decades after its use became
efficient. Changes in technology may make a regulation inefficient, but
the regulation may stay in place for a long time.
In the private sector, market forces often push firms into revising their
view of the problem at hand, whereas there is ordinarily no market
mechanism to force governments to adopt relatively efficient regulations.
Put another way, government failure often arises precisely because