Political culture and monopoly price determination

Abstract

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Lobbying and compromise

“…Suppose that a status-quo policy, I s , is challenged by one interest group and defended by another group. This policy can be the price of a regulated monopoly, Baik (1999), Epstein and Nitzan (2003), the degree of restriction of bank branching, Kroszner and Strahan (1999), or the determination of minimum wage, Grossman and Helpman (2001, Chapter 8.2). The defender of the status-quo policy (henceforth, interest group d) prefers the status-quo policy I s to any alternative policy.…”

“…Governments determine quotas that may well exceed the quota preferred by the capital owner who takes part in the political contest over the quota, and this quota can be lower than his optimal amount of migrants in a situation where the quota is certainly approved (there is no political contest on the determination of the quota), see for example Boeri, Hanson and McCormick (2002). The price of a regulated monopoly, Baik (1999), Epstein and Nitzan (2003), or the degree of restriction of bank branching, Kroszner and Strahan (1999), may well be other examples where the proposed policy is more extreme than the policy that would have been proposed by the relevant interest groups.…”

“…In contrast to Epstein and Nitzan (2004a) and Munster (2004), who consider the case where two interest groups compete over the approval of a policy that each of them proposes, in this paper we assume that the decision on the proposal is made by the politician and not by the interest groups. As in Hillman (1982), Grossman and Helpman (2001) and Epstein and Nitzan (2003), we assume that the politician's utility is a composite function of the public well being (social welfare) and the lobbying outlays made by the interest groups. When the lobbying outlays are positively related to the policy set by the politician, the stronger his narrow motivation represented by the weight assigned to the lobbying outlays, the more extreme is the proposed policy.…”

Ambiguous political power and contest efforts

“…The studies concerned with the effect of asymmetry have focused on prize, value or stake asymmetry (Epstein and Nitzan, 2004, 2003Hillman and Riley, 1989;Hurley, 1998;Konrad and Schlesinger, 1997;Nti, 1999Nti, , 1997Stein, 2002), asymmetric lobbying capabilities (Baik, 1999(Baik, , 1994Gradstein, 1995;Keem, 1998;Kohli and Singh, 1999;Leininger, 1993;Singh and Wittman, 2001;Stein, 2002), asymmetric information (Hurley, 1998;Hurley andShogren, 1998a, 1998b;Wärneryd, 2003), asymmetric constrained budgets Gale, 1998, 1997) and asymmetric sharing rules within groups competing on a collective rent (Davis and Reilly, 1999;Nitzan, 1991). The studies concerned with the effect of uncertainty have focused on uncertainty regarding the awarded prize (Chung, 1999), uncertainty regarding the existence of opposition (Cairns and Long, 1991;Ellingsen, 1991;Epstein and Nitzan, 2003) and uncertainty regarding the mere award of the contestable rent (Kahana and Nitzan, 1999). denote by d. We assume that they share the common prior that d is equally likely to be one bureaucrat or the other.…”

Implicit Mercantilism, Oligopoly, and Trade*

“…Relative to this definition of mercantilism, we label the modern mercantilism of Asian economies "implicit." A significant academic literature identifies the mercantile quality of the modern Asian state (Epstein and Nitzan, 2002;Landa, 1994). There is also a large technical literature on institutional structure and trade performance (notably Hillman, 1989), as well as a literature concerning specifically the structure and performance of Asian neo-mercantile states (Dhar and Panagariya, 1999).…”