Heterogeneous groups and rent-seeking for public goods
We present a model of endogenous public good provision and group rent-seeking influence. Specifically, two groups with different preferences over public policy and different sizes engage in rent-seeking or lobbying activities to influence policymaking in their preferred direction. When there is within-group cooperation in lobbying, both groups neutralize each other in the political process. Without within-group cooperation, the free-rider problem in lobbying makes the smaller group politically influent. In both cases, the total level of rent-seeking activities is shown to be increasing in taste heterogeneity but decreasing in group size asymmetry.
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