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The Politics of Growth: Can Lobbying Raise Growth and Welfare?

  • Paulo Júlio

    ()

    (Gabinete de Estratégia e Estudos, Ministry of Economy, Innovation and Development)

This paper analyses the link between lobbying, market structure, growth, and welfare. We consider a setup where lobbyist firms undertake contributions to a policy-maker in exchange for profit increasing regulations, in a general equilibrium model of R&D driven growth. We find that, despite increasing concentration – which leads to higher prices and less varieties – lobbying may stimulate growth and increase welfare by means of an expansion in aggregate demand if its real costs are small. This conclusion is supported by a simple calibration exercise.

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File URL: http://www.gee.min-economia.pt/RePEc/WorkingPapers/gee_papers_31.pdf
File Function: First version, 2010
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Paper provided by Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação in its series GEE Papers with number 0031.

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Length: 46 pages
Date of creation: Dec 2010
Date of revision: Dec 2010
Handle: RePEc:mde:wpaper:0031
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