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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Paper provided by El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza in its series Papers with number
42.
Find related papers by JEL classification: O20 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - General H50 - Public Economics - - National Government Expenditures and Related Policies - - - General D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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