Transition Policy: A Conceptual Framework

47 Pages Posted: 5 Apr 2003 Last revised: 1 Nov 2010

See all articles by Louis Kaplow

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

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Date Written: April 2003

Abstract

Legal change, whether through legislation, regulation, or court decision, is a common phenomenon, and virtually all reform creates both gains and losses for those who under the prior regime took actions that would have lasting effects. This article offers a conceptual framework for assessing the desirability of different transition policies, ranging from compensation of losses and taxation of gains, grandfathering of pre-enactment investments, and delayed or partial implementation to complete and immediate implementation or even retroactive application. Emphasis is placed on how transitions and various mitigation strategies affect the incentives of and risk borne by private actors as well as on the behavior of government and how it may be affected by transition policy.

Suggested Citation

Kaplow, Louis, Transition Policy: A Conceptual Framework (April 2003). NBER Working Paper No. w9596. Available at SSRN: https://ssrn.com/abstract=392983

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