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On the effects of factor mobility on local infrastructure policy and rent-seeking

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  • Lorz, Jens Oliver

Abstract

This paper deals with the influence of factor mobility on local infrastructure policy and rent-seeking activities of local interest groups. It employs a model where households differ with respect to their endowment with the immobile factor land. Local governments decide about the level of productive infrastructure in their jurisdiction. According to their land endowment, different households benefit to a different degree from the infrastructure. This redistribution effect of local infrastructure gives households an incentive for rent-seeking: Landabundant households seek to influence their government to increase the level of infrastructure whereas land-poor households seek to influence their government to reduce the infrastructure level. As this paper shows, factor mobility and fiscal competition between local governments lead to increasing rent-seeking expenditures for a broad class of cases.

Suggested Citation

  • Lorz, Jens Oliver, 1998. "On the effects of factor mobility on local infrastructure policy and rent-seeking," Kiel Working Papers 850, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:850
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    References listed on IDEAS

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    More about this item

    Keywords

    Factor Mobility; Fiscal Competition; Rent-Seeking;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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