Social Heterogeneity and Wasteful Lobbying
Using a general equilibrium model with endogenous policy, the authors explore how heterogeneity affects wasteful lobbying by sectoral interest groups. With the help of a simulation approach, they first investigate the impact of information heterogeneity on how lobbies react to a shift from a soft to a strict government budget constraint. Next, the authors examine how lobbying is influenced by heterogenous perception of the general equilibrium implications of lobbying effort. Finally, they explore the consequences of heterogenous specialization in households' asset portfolios. The authors conclude that social heterogeneity in information, perceptions, and portfolio compositions increases incentives to lobby. Copyright 1999 by Kluwer Academic Publishers
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