Local Advantage in a Global Context
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Tsuyoshi Hatori and Kiyoshi Kobayashi Referenda in which imperfectly informed individuals are called to vote for or against an innovative project can result in inefficient outcomes, as compared to the outcomes that would arise with completely informed individuals. In this chapter, an incomplete information game is presented to investigate the influence of interest groups’ voices on individuals’ judgements. It is shown that on account of the lack of knowledge of individuals about an innovative project, a limited number of interest groups that disagree with the innovation utilize their voices in strategic fashion and try to prevent a referendum outcome containing the majority will. Alternative institutional designs are introduced to overcome this inefficiency, and some problems regarding a referendum process are discussed. 9.1 INTRODUCTION Innovations and their adoption are the keys to regional growth and development. Faced with intense interregional and international competition, regional policy makers must find innovative solutions for enhancing the competitive advantage of their regions. Innovations, however, are not the result of a decision by a single policy maker, but follow from the invention of policy options and the search for solutions made interactively by regional agents, including but not limited to a policy maker. This forces us to realize that innovations and their adoption are not immune to the political arena. Indeed, the implementation of innovations depends on regional political systems, in which regional agencies wield power and authority, interact with each other, exchange their knowledge and information, and influence and enact regional policies and decisions. Given...
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