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Abstract
Direct commands, market based, or combined, whichever is the government's mean of
intervention, is expected to raise political lobbying and pressure. This study offers a
political-economic model of an industry, which is regulated by an integrated system
of both direct and market based policies. The model is used for a normative
theoretical analysis and as a basis for a structural econometric framework. Exploiting
a unique data set that describes the regulations of irrigation water in Israel during the
mid eighties by means of quotas and prices, the political and technological parameters
of the model are structurally estimated and used to assess the relative efficiency of
quotas, prices and integrated regulation regimes.