Fundamentals for a Theory of Policy Instruments

Scientific theories on the effects of various policy instruments are often formulated without accounting for the circumstances under which these instruments are applied. Also the implementation process is often neglected. Economic theory formulation often concentrates solely on the influence of the instrument‐as‐intended on the cost‐benefit relationship of various behavioural alternatives. Theories based on the joint influence of possible combinations of circumstances rather than the isolated influences of individual circumstances tend to become tremendously complex. Consequently, attempts to formulate such theories are few. Nevertheless, precisely that combined perspective offers invaluable insights when it comes to making choices concerning practical policy issues. This holds true regardless of whether the choice is part of a,more or less rational and conscious decision‐making process or, alternatively, involves a more personal and intuitive decision which is later to be tabled as the subject of political or administrative debate. This article deals with some fundamentals which provided the groundwork for formulating a scientific theory on the effects of policy instruments by the authors. The complexity of the matter will be reduced without affecting either the number or the diversity of circumstances that can be discussed simultaneously. In addition, attention will be focused on the role and influence of the implementation process which acts as an intermediary between the “paper” policy instruments and the actual policy measures.