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Wealth Constraints, Lobbying and the Efficiency of Public Allocation

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  • Esteban, J.
  • Ray, D.

Abstract

In Esteban and Ray (1999) we formalize a model in which individuals lobby before the government in order to benefit from some productivity enhancing government action (infrastructure, direct subsidies, permissions, in short). The government honestly tries to allocate these permissions to the agents that will make the best use of them, as revealed by the intensity of their lobbying. If the marginal cost of resources varies with wealth, the amount of information transmitted through lobbying will depend on the degree of inequality. In this paper, we summarize the main approach and examine the special case of equal wealth.

Suggested Citation

  • Esteban, J. & Ray, D., 2000. "Wealth Constraints, Lobbying and the Efficiency of Public Allocation," Papers 42, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza.
    • Handle: RePEc:fth:ieegpb:42
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    Cited by:

    1. Teng Wang, 2011. "Lobbying paradox of strategic export policy in a differentiated duopoly," International Economics and Economic Policy, Springer, vol. 8(3), pages 323-336, September.
    2. Shun-ichiro Bessho & Kimiko Terai, 2011. "Competition for private capital and central grants: the case of Japanese industrial parks," Economics of Governance, Springer, vol. 12(2), pages 135-154, June.
    3. Ferreira, Francisco H. G. & Lakner, Christoph & Lugo, Maria Ana & Özler, Berk, 2014. "Inequality of Opportunity and Economic Growth: A Cross-Country Analysis," IZA Discussion Papers 8243, Institute of Labor Economics (IZA).
    4. Joan Esteban & Debraj Ray, 2006. "Inequality, Lobbying, and Resource Allocation," American Economic Review, American Economic Association, vol. 96(1), pages 257-279, March.
    5. Campante, Filipe R. & Ferreira, Francisco H.G., 2007. "Inefficient lobbying, populism and oligarchy," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 993-1021, June.
    6. Josepa Miquel-Florensa, 2010. "“Tell me what you need”: signaling with limited resources," Journal of Economics, Springer, vol. 99(1), pages 1-28, February.
    7. Stephan Litschig & María Lombardi, 2019. "Which tail matters? Inequality and growth in Brazil," Journal of Economic Growth, Springer, vol. 24(2), pages 155-187, June.
    8. Langtry, Alastair, 2024. "Inside the West Wing: Lobbying as a contest," Journal of Public Economics, Elsevier, vol. 231(C).
    9. Ghatak, Maitreesh & Morelli, Massimo & Sjostrom, Tomas, 2007. "Entrepreneurial talent, occupational choice, and trickle up policies," Journal of Economic Theory, Elsevier, vol. 137(1), pages 27-48, November.

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    More about this item

    Keywords

    GAME THEORY ; ECONOMIC MODELS ; LOBBYING;
    All these keywords.

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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