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Policy Reform and the Free-Rider Problem


  • John R. Conlon


  • Paul Pecorino



We investigate policy reform in a model with both lobbying, which involves a free-rider problem, and ordinary rent seeking, which does not. These activities involve similar skills, so a reform which reduces rents shifts labor into lobbying. Also, because of the free-rider problem, the marginal return to the industry from lobbying may greatly exceed an individual firm's return to lobbying. Thus, the shift into lobbying caused by rent reduction may lead to large increases in transfers to the lobbying industry. Under some circumstances, a reform which reduces available rents increases total rents plus transfers to the industry.

Suggested Citation

  • John R. Conlon & Paul Pecorino, 2004. "Policy Reform and the Free-Rider Problem," Public Choice, Springer, vol. 120(1_2), pages 123-142, July.
  • Handle: RePEc:kap:pubcho:v:120:y:2004:i:1_2:p:123-142

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    References listed on IDEAS

    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    2. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
    3. Robin Cubitt & Chris Starmer & Robert Sugden, 1998. "On the Validity of the Random Lottery Incentive System," Experimental Economics, Springer;Economic Science Association, vol. 1(2), pages 115-131, September.
    4. R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
    5. Saijo, T. & Yamato, T. & Yokotani, K. & Cason, T.N., 2000. "Voluntary Participation Game Experiments with a Non-Excludable Public Good: Is Spitefulness a Source of Cooperation?," ISER Discussion Paper 0494, Institute of Social and Economic Research, Osaka University.
    6. Kachelmeier, Steven J. & Shehata, Mohamed, 1992. "Culture and competition: A laboratory market comparison between China and the West," Journal of Economic Behavior & Organization, Elsevier, vol. 19(2), pages 145-168, October.
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    Cited by:

    1. Anica Zeyen & Markus Beckmann & Stella Wolters, 2016. "Actor and Institutional Dynamics in the Development of Multi-stakeholder Initiatives," Journal of Business Ethics, Springer, vol. 135(2), pages 341-360, May.
    2. George Economides & Sarantis Kalyvitis & Apostolis Philippopoulos, 2008. "Does foreign aid distort incentives and hurt growth? Theory and evidence from 75 aid-recipient countries," Public Choice, Springer, vol. 134(3), pages 463-488, March.
    3. S. Sethi & Donald Schepers, 2014. "United Nations Global Compact: The Promise–Performance Gap," Journal of Business Ethics, Springer, vol. 122(2), pages 193-208, June.

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