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Abstract
The article presents a theory of policy timing that relies on uncertainty and transaction
costs to explain the optimal timing and duration of policy reforms. Delaying reforms
resolves some uncertainty by gaining valuable information and saves transaction costs.
Implementing reforms without waiting increases welfare by adjusting domestic policies
to changed market parameters. Optimal policy timing is found by balancing the tradeoff
between delaying reforms and implementing reforms without waiting. Our theory
offers an explanation of why countries differ with respect to the length of their policy
reforms and why applied studies often judge agricultural policies to be inefficient when
actually they may not be.