TY - JOUR
T1 - Wealth constraints, lobbying and the efficiency of public allocation
AU - Esteban, Joan
AU - Ray, Debraj
N1 - Funding Information:
Esteban acknowledges the financial support of Fundación Pedro Barrié de la Maza and Research Grant DGICYT PB96-0897. Ray acknowledges financial support under a John Simon Guggenheim Fellowship for 1997–98, when these ideas were first developed.
PY - 2000/5
Y1 - 2000/5
N2 - In Esteban and Ray (1999, Inequality public allocation and development, Mimeo.) we formalize a model in which individuals lobby before the government in order to benefit from some productivity-enhancing government action (infrastructures, 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 ofinequality. In this paper, we summarize the main approach and examine the special case of equal wealth. We show that the nature of signaling equilibria is critically affected by per-capita wealth. (C) 2000 Elsevier Science B.V. All rights reserved.
AB - In Esteban and Ray (1999, Inequality public allocation and development, Mimeo.) we formalize a model in which individuals lobby before the government in order to benefit from some productivity-enhancing government action (infrastructures, 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 ofinequality. In this paper, we summarize the main approach and examine the special case of equal wealth. We show that the nature of signaling equilibria is critically affected by per-capita wealth. (C) 2000 Elsevier Science B.V. All rights reserved.
KW - Development
KW - Efficiency
KW - Lobbying
KW - Signaling games
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U2 - 10.1016/S0014-2921(00)00031-3
DO - 10.1016/S0014-2921(00)00031-3
M3 - Article
AN - SCOPUS:0034048481
SN - 0014-2921
VL - 44
SP - 694
EP - 705
JO - European Economic Review
JF - European Economic Review
IS - 4-6
ER -