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| Title: | An Open Economy Model of Political Influence and Competition Among Rent Seeking Groups |
| Authors: | Roe, Terry L.
Yeldan, A. Erinc |
| Issue Date: | 1988 |
| Series/Report no.: | Bulletin 88-1 |
| Abstract: | The paper develops a formal model of government's economic decisions
as influenced by private agents within the context of neoclassical
political economy. The government is assumed to form preferences over
interest groups in the economy; in turn these preferences are influenced
by the rent seeking behavior of these groups. An open, two-household,
two-sector general equilibrium model is constructed to depict an
environment in which preference-maximizing (rational) individuals allocate
otherwise productive labor to directly unproductive rent seeking
activities in order to exert political pressure on the government's choice
of policy instruments. With the aid of five comparative-static
experiments, the game-theoretic component and the second-best nature of
the rent seeking environment is discussed. Insights are also provided on
the influence of technological change, and changes in lobbying efficiency
on resources allocated to rent seeking by interest groups. Key words:
Rent Seeking, Political Economy, General Equilibrium. |
| URI: | http://purl.umn.edu/7499 |
| Institution/Association: | University of Minnesota>Economic Development Center>Bulletins |
| Total Pages: | 30 |
| Language: | English |
| Collections: | Bulletins
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| edc88-01.pdf | 1332Kb | PDF | View/Open |
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