An Open Economy Model of Political Influence and Competition Among Rent Seeking Groups

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An Open Economy Model of Political Influence and Competition Among Rent Seeking Groups

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Roe, Terry
Yeldan, Erinc

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Erinc Yeldan

Abstract

The paper develops a formal model of government's economic decisions as influenced by private agents within the context of neoclassical political economy. The government is assumed to form preferences over interest groups in the economy; in turn these preferences are influenced by the rent seeking behavior of these groups. An open, two-household, two-sector general equilibrium model is constructed to depict an environment in which preference-maximizing (rational) individuals allocate otherwise productive labor to directly unproductive rent seeking activities in order to exert political pressure on the government's choice of policy instruments. With the aid of five comparative-static experiments, the game-theoretic component and the second-best nature of the rent seeking environment is discussed. Insights are also provided on the influence of technological change, and changes in lobbying efficiency on resources allocated to rent seeking by interest groups. Key words: Rent Seeking, Political Economy, General Equilibrium.

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Paper provided by University of Minnesota, Economic Development Center in its series Bulletins with number 7499.

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Date of creation: 1988
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Handle: RePEc:ags:umedbu:7499

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Keywords: Political Economy;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Honma, Masayoshi & Hayami, Yujiro, 1986. "Structure of agricultural protection in industrial countries," Journal of International Economics, Elsevier, vol. 20(1-2), pages 115-129, February. [Downloadable!] (restricted)
Prescott, Edward C & Boyd, John H, 1987. "Dynamic Coalitions: Engines of Growth," American Economic Review, American Economic Association, vol. 77(2), pages 63-67, May. [Downloadable!] (restricted)
Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August. [Downloadable!] (restricted)

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Kozloff, Keith & Runge, C. Ford, 1991. "International Trade In The Food Sector And Environmental Quality, Health, And Safety: A Survey Of Policy Issues," Staff Papers 13325, University of Minnesota, Department of Applied Economics. [Downloadable!]

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