Heterogenous Groups and Rent-Seeking for Public Goods
We present a model of endogenous public good provision and group rent-seeking influence e.g. lobbying. Specifically, two groups with different preferences over public good consumption and different sizes engage in rent-seeking 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, rent-seeking by each group is increasing in the degree of preference heterogeneity and in membership size of both groups.
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