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

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  • Paulo Júlio

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

Abstract

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.

Suggested Citation

  • Paulo Júlio, 2010. "The Politics of Growth: Can Lobbying Raise Growth and Welfare?," GEE Papers 0031, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2010.
    • Handle: RePEc:mde:wpaper:0031
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    Cited by:

    1. Yu‐Bong Lai, 2020. "Rent‐seeking, R&D, and productivity," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(4), pages 404-419, September.

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    More about this item

    Keywords

    Lobbying; Market structure; R&D investment; Growth; Welfare.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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