DP289 A Democratic Model of the `Rent-Sought' Benefit Cycle

Author(s): Michael Beenstock

Publication Date: April 1989

Keyword(s): Democracy , Externalitics , Lobby Groups , Majority Voting , Political Economy , Public Choice

JEL(s): 024 , 025

Programme Areas: Applied Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP289.asp

Lobby groups press for various administrative concessions which are granted at the expense of the rest of society. This paper tries to explain why sometimes the rest of society does not prevent the lobbies from exploiting them while at other times it protests against the injustice. It also suggests why after a while the public may demand a reform in which the concessions are abolished. The basic analytical insight is that there may be an externality to successful lobbying; when one group succeeds this establishes a precedent that makes it easier for other groups to succeed. The chain reaction that is thus triggered may be to the advantage of a majority of the electorate.