Abstract
<title>Abstract</title> <p> Public choice theory has largely explained why inefficient policies persist. This paper examines a logically prior question: why do political systems systematically choose particular classes of policy instruments. It develops a model of political instrument choice in which governments choose between marginally adjusting instruments that rely on prices, entry, exit, and decentralized choice and suppressive instruments that rely on administrative allocation, quantity restrictions, and discretionary control. The model implies that suppressive instruments may be politically preferred even when marginally adjusting alternatives generate higher aggregate welfare because they reduce the visibility of adjustment costs, preserve administrative discretion, stabilize governing coalitions, and diffuse responsibility for economically costly outcomes. Applications across water pricing, education, healthcare, housing, and labor markets illustrate the framework. The paper concludes that repeated political selection of suppressive instruments generates institutional complementarity and cumulative institutional drag, providing one political mechanism through which persistent resource misallocation and slower long-run economic adaptation may emerge. <bold>JEL Classifications:</bold> D72, D78, P16, H11, L51, O43 </p>