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Cartels, coalitions, and constitutional politics

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  • James Buchanan
  • Dwight Lee

Abstract

While every industry desires political protection against the rigors of competition, no industry would see advantage in having that protection generalized to the entire economy. The ideal from the perspective of a given industry is to receive protections for itself, while the remainder of the economy remains competitive. Such a priviledged outcome is not possible, of course, in a broadly democratic regime, and the industry that obtains protections for itself does so by joining into a coalition, explicit or otherwise, which obtains protections for everyone in the coalition. A simple model is developed in which an equilibrium coalition emerges. While it is obviously better for an industry to be in, rather than outside, such an existing coalition, it is shown that even those who are members of a protected coalition may be better off under a constitutional regime that prevents any industry from receiving protections against competition. Copyright George Mason University 1991

Suggested Citation

  • James Buchanan & Dwight Lee, 1991. "Cartels, coalitions, and constitutional politics," Constitutional Political Economy, Springer, vol. 2(2), pages 139-161, March.
    • Handle: RePEc:kap:copoec:v:2:y:1991:i:2:p:139-161
    DOI: 10.1007/BF02404425
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    References listed on IDEAS

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    1. Robert Bates & William Rogerson, 1980. "Agriculture in development: A coalitional analysis," Public Choice, Springer, vol. 35(5), pages 513-527, January.
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    Cited by:

    1. Ludwig Van den Hauwe, 2005. "Constitutional Economics II," Chapters, in: Jürgen G. Backhaus (ed.), The Elgar Companion to Law and Economics, Second Edition, chapter 13, Edward Elgar Publishing.
    2. Vanberg, Viktor, 1990. "A Constitutional Political Economy Perspective on International Trade," 1990: The Environment, Government Policies, and International Trade Meeting, December 1990, San Diego, CA 50875, International Agricultural Trade Research Consortium.

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