Inequality, Lobbying, and Resource Allocation
نویسندگان
چکیده
This paper describes how wealth inequality may distort public resource allocation. A government seeks to allocate limited resources to productive sectors, but sectoral productivity is privately known by agents with vested interests in those sectors. They lobby the government for preferential treatment. The government—even if it honestly seeks to maximize economic efficiency—may be confounded by the possibility that both high wealth and true economic desirability create loud lobbies. Broadly speaking, both poorer economies and unequal economies display greater public misallocation. The paper warns against the conventional wisdom that this is so because such governments are more “corrupt.” (JEL D72, D78, D82, O16)
منابع مشابه
Wealth constraints, lobbying and the e$ciency of public allocation
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 bene"t 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 rev...
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The ratio in [A.3′] is the factor increase in the cost by an increase in the bidding expenditure by a factor of δ > 1. As wealth increases both costs decrease. Our assumption simply posits that the cost at the higher level of bidding does not fall faster than the lower cost. In particular, this assumption excludes the possibility that the costs of expending δr and r tend to converge to each oth...
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