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A dynamic model of endogenous interest group sizes and policymaking

Author

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  • Sadiraj, V.
  • Tuinstra, J.
  • Winden, F. van

    (Universiteit van Amsterdam)

Abstract

We present a dynamic model of endogenous interest group sizes and policymaking. Our model integrates `top-down' (policy) and `bottom-up' (behavioral) influences on the development of interest groups. We show that, for example an increase in the contribution by members of an interest group need not induce larger subsidies to that group, even though it would in case of fixed interest group sizes. This is due to a political participation effect, next to a redistribution effect. On the other hand, the dynamic analysis of the model shows that reliance on equilibrium results such as these can be misleading since equilibria may not be stable. In fact, complicated dynamics may emerge leading to erratic and path dependent time patterns for policy and interest group sizes. We demonstrate that our model can endogenously generate the types of spurts and declines in organizational density that are observed in empirical studies.

Suggested Citation

  • Sadiraj, V. & Tuinstra, J. & Winden, F. van, 2001. "A dynamic model of endogenous interest group sizes and policymaking," CeNDEF Working Papers 01-03, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    • Handle: RePEc:ams:ndfwpp:01-03
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    References listed on IDEAS

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    1. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-769, August.
    2. Mueller,Dennis C. (ed.), 1997. "Perspectives on Public Choice," Cambridge Books, Cambridge University Press, number 9780521553773.
    3. van Winden, Frans, 1999. "On the Economic Theory of Interest Groups: Towards a Group Frame of Reference in Political Economics," Public Choice, Springer, vol. 100(1-2), pages 1-29, July.
    4. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
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    Cited by:

    1. Clare Leaver & Miltiadis Makris, 2006. "Passive Industry Interests in a Large Polity," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(4), pages 571-602, October.

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