License to Govern: the Institution of Agricultural Policy Making in Norway
Abstract: In the (agricultural) economics literature, agricultural policies are frequently explained by either specific policy objectives or by public choice arguments (voters, political power of specialised interest groups). This paper illustrates how the policy decision-making process itself can play a decisive role in explaining observed policies. For more than 60 years, the farmers’ organisations in Norway have been granted the legal and exclusive right to enter into negotiations with the government about direct budget support and administered prices. The institution stands out when compared to institutions that govern agricultural policy decision-making in other developed countries, or to institutions that govern decision-making for the self-employed in other sectors of the Norwegian economy. We start out with a detailed description of the institution. A discussion of potential drivers of institutional change and evaluation of the institution’s performance with respect to good governance follows. Finally, we provide a sketch of a formal model to study the institution’s effects on policy design and sector performance. The model enables us to discuss the possible effects of institutional change on agricultural policy and the agricultural sector.
