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Policy Persistence and Rent Extraction

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  • Silke Friedrich

Abstract

The existing literature has shown that special interest groups can have both growth enhancing and retarding effects on an economy. In either case it is always assumed that the nature of the special interest groups remains constant over time. The hypothesis of this paper is that a dynamic relationship exists between politicians and lobbyists. A theoretical framework in which established and new lobbies overlap is developed to model the incentives a government might have to behave in a manner consistent with the hypothesis. In this structure despite the fact that they support projects from which all productive benefits have been extracted politicians are still rationally reelected.

Suggested Citation

  • Silke Friedrich, 2011. "Policy Persistence and Rent Extraction," ifo Working Paper Series 110, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_110
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    File URL: http://www.cesifo-group.de/DocDL/IfoWorkingPaper-110.pdf
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    References listed on IDEAS

    as
    1. Aidt, T. & Dutta, J. & Loukoianova, E., 2003. "Policy Myopia," Cambridge Working Papers in Economics 0344, Faculty of Economics, University of Cambridge.
    2. Anderson, James E., 1998. "The Uruguay Round and welfare in some distorted agricultural economies," Journal of Development Economics, Elsevier, vol. 56(2), pages 393-410, August.
    3. Aidt, Toke S. & Hillman, Arye L., 2008. "Enduring rents," European Journal of Political Economy, Elsevier, vol. 24(3), pages 545-553, September.
    4. Le Breton, Michel & Salanie, Francois, 2003. "Lobbying under political uncertainty," Journal of Public Economics, Elsevier, vol. 87(12), pages 2589-2610, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Silke Friedrich, 2013. "Policy persistence and rent extraction," Public Choice, Springer, vol. 157(1), pages 287-304, October.
    2. Warren, Patrick L. & Wilkening, Tom S., 2012. "Regulatory fog: The role of information in regulatory persistence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 840-856.
    3. Christian Grimme & Steffen Henzel & Elisabeth Wieland, 2014. "Inflation uncertainty revisited: a proposal for robust measurement," Empirical Economics, Springer, vol. 47(4), pages 1497-1523, December.
    4. Silke Friedrich, 2013. "Policy Persistence and Rent Extraction," CESifo Working Paper Series 4325, CESifo Group Munich.

    More about this item

    Keywords

    Lobby; special interest; efficiency; elections;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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