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Markets in political influence: rent-seeking, networks and groups

  • Murray, Cameron K.

Mainstream economic theories of rent-seeking and interest groups typically ignore the parallel, yet highly relevant, streams of research on social networks and groups. Incorporating these broader social and psychological theories into economic models of rent-seeking appear to be a promising avenue for developing an integrated theory of the market for political influence that predicts many of the observed stylised facts, and can better inform policy makers. Such a theory has the potential to predict the often conflicting findings of empirical studies - such as significant underinvestment in rent-seeking, loyalty of political donors and recipients, and the variation in the prevalence of the ‘revolving door’ across industries. This review highlights the shortcomings of basic rent-seeking theory and analyses how network and group concepts can improve the alignment between theory and evidence. Directions in research and policy analysis based on an integrated model are discussed.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42070.

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Date of creation: 19 Oct 2012
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Handle: RePEc:pra:mprapa:42070
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  1. Marianne Bertrand & Matilde Bombardini & Francesco Trebbi, 2014. "Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process," American Economic Review, American Economic Association, vol. 104(12), pages 3885-3920, December.
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  3. Menezes, Flavio & Quiggin, John, 2009. "Markets for Influence," Risk and Sustainable Management Group Working Papers 151189, University of Queensland, School of Economics.
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  12. Vignes, Annick & Etienne, Jean-Michel, 2011. "Price formation on the Marseille fish market: Evidence from a network analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 50-67.
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  14. William F. Shughart II & Robert D. Tollison & Zhipeng Yan, 2003. "Rent Seeking into the Income Distribution," Kyklos, Wiley Blackwell, vol. 56(4), pages 441-456, November.
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  16. Tullock, Gordon, 1997. " Where Is the Rectangle?," Public Choice, Springer, vol. 91(2), pages 149-59, April.
  17. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
  18. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
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