A Model of Inequality and Interest Group Politics*

In this paper we build a model to examine inequality of process and inequality of outcomes in interest group politics. The model has the following features: (i) interest groups which compete for rents in a noncooperative game, (ii) a self-interested rent-setting political decision maker (iii) democratic or popular pressure as a check on the self-interest of the political decision maker. We allow for a fixed and an endogenous number of influence groups, for differences in the effectiveness and precommitment abilities of interest groups, and for repeated play of the influence game. We show that in some cases, the costs of influence activities are highest when groups are relatively equal in their effectiveness or capacity for influence. We also show that this result can be reversed if social welfare incorporates enough concern for equity. We also show that in some cases, the political decision maker sets rents in such a way as to compensate for changes in inequality in the process of interest group politics.