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Wealth constraints, lobbying and the efficiency of public allocation

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  • Esteban, Joan
  • Ray, Debraj

Abstract

In Esteban and Ray (1999) we formalize a model in which individuals lobby before the government in order to benefit from some productivity enhancing government action (infrastructure, direct subsidies, permissions, in short). The government honestly tries to allocate these permissions to the agents that will make the best use of them, as revealed by the intensity of their lobbying. If the marginal cost of resources varies with wealth, the amount of information transmitted through lobbying will depend on the degree of inequality. In this paper, we summarize the main approach and examine the special case of equal wealth.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 44 (2000)
Issue (Month): 4-6 (May)
Pages: 694-705

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Handle: RePEc:eee:eecrev:v:44:y:2000:i:4-6:p:694-705

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  1. Ljungqvist, Lars, 1993. "Economic underdevelopment : The case of a missing market for human capital," Journal of Development Economics, Elsevier, vol. 40(2), pages 219-239, April.
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  8. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
  9. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
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  11. Ray, Debraj & Streufert, Peter A, 1993. "Dynamic Equilibria with Unemployment Due to Undernourishment," Economic Theory, Springer, vol. 3(1), pages 61-85, January.
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Cited by:
  1. Campante, Felipe R. & Ferreira, Francisco G.H., 2004. "Inefficient lobbying, populism and oligarchy," Policy Research Working Paper Series 3240, The World Bank.
  2. Ghatak, Maitreesh & Morelli, Massimo & Sjostrom, Tomas, 2007. "Entrepreneurial talent, occupational choice, and trickle up policies," Journal of Economic Theory, Elsevier, vol. 137(1), pages 27-48, November.
  3. Joan Esteban & Debraj Ray, 2006. "Inequality, Lobbying, and Resource Allocation," American Economic Review, American Economic Association, vol. 96(1), pages 257-279, March.
  4. Ferreira, Francisco H. G. & Lakner, Christoph & Lugo, Maria Ana & Ozler, Berk, 2014. "Inequality of opportunity and economic growth : a cross-country analysis," Policy Research Working Paper Series 6915, The World Bank.
  5. Shun-ichiro Bessho & Kimiko Terai, 2008. "Competition for Private Capital and Central Grants: The Case of Japanese Industrial Parks," Working Papers 080909, University of California-Irvine, Department of Economics.
  6. Teng Wang, 2011. "Lobbying paradox of strategic export policy in a differentiated duopoly," International Economics and Economic Policy, Springer, vol. 8(3), pages 323-336, September.

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