Productivity growth and welfare in a model of allocative inefficiency

Cothren, Richard; Radhakrishnan, Ravi

doi:10.1007/s00712-017-0575-z

Cited by 3 publications

(4 citation statements)

References 26 publications

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“…Since firms in my model have to lobby in each time period to obtain a share of the public expenditure, the model captures the persistence in lobbying activities of firms observed in the data. In terms of the analytical framework, my paper is closest to Cothren and Radhakrishnan (2017, 2018). However, the inclusion of a publicly provided private input is a significant point of departure which allows me to look at allocative effects of lobbying in the presence of both a private and public input.…”

Section: Related Literaturementioning

confidence: 98%

“…For instance, Burlon (2017) develops a model that shows how voting influences the distribution of public expenditure across sectors and how that affects the aggregate efficiency of an economy. Cothren and Radhakrishnan (2018) develops a model in which resource allocation between sectors is determined by the lobbying activity of firms. The model shows that lobbying may lead to misallocation of the resources and welfare loss in the short-run.…”

Section: Related Literaturementioning

confidence: 99%

“…As mentioned earlier, the TFP is constant at any given time, but it can evolve over time as a result of learning by doing. However, similar to Lucas (1998) and Cothren and Radhakrishnan (2018), I assume that the learning by doing effects are external to the firms. That is, the firms do not take these dynamic learning effects into consideration when deciding on the allocation of resources towards lobbying.…”

Section: Lobbying For the Public Inputmentioning

confidence: 99%

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Public expenditure allocation, lobbying, and growth

Radhakrishnan

2022

J Public Economic Theory

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I develop a two sector model of growth where the final good in each sector is produced using labor and a publicly provided private input (public input). The public input is funded by a proportional tax on the consumption of the two final goods. In the benchmark case, the government allocates the public input between the two sectors to maximize consumer welfare. I contrast the benchmark case to one where the public input allocation is determined via lobbying by firms in the two sectors. In this set up, I first show that allocation of the public input is determined by the relative lobbying power of the firms in the two sectors. Further, lobbying can generate the welfare maximizing allocation only under a very specific set of conditions and, if those set of conditions are not met, then an initial misallocation of the public input gets magnified over time.

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Section: Related Literaturementioning

confidence: 98%

Section: Related Literaturementioning

confidence: 99%

Section: Lobbying For the Public Inputmentioning

confidence: 99%

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Public expenditure allocation, lobbying, and growth

Radhakrishnan

2022

J Public Economic Theory

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“…alternatively, to prevent the establishment of barriers (e.g.,Grossmann and Steger 2008;Mathur et al 2013;Cothren and Radhakrishnan 2017;Bellettini et. al., 2013;Figueiredo and Ritcher, …”

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confidence: 99%

The effects of automation and lobbying in wage inequality: a directed technical change model with routine and non-routine tasks

Afonso

Lima²,

Sequeira³

2022

J Evol Econ

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We devise a Directed Technical Change (DTC) multisector Schumpeterian growth model in which both wage inequality and wage polarization are analysed. To that end, we introduced tasks in the model, some of which can be automated -replaced by robots or machines -, thus combining the DTC and task-based growth literature in an unified framework. This model produces positive relationships both (i) between the relative supply of high-skilled workers and the skill premium and (ii) between automation and wage polarization. Moreover, within the model, we analyse Lobbying as an activity that can affect the wage distribution and integrate it in the strategic interations between firms. We find that it can reduce the effects of automation on wage polarization, and through this channel possibly affecting the wage distribution without affecting the skill premium.

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Aiding refugees, aiding peace?

Lehmann

2020

J Public Economic Theory

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Productivity growth and welfare in a model of allocative inefficiency

Cited by 3 publications

References 26 publications

Public expenditure allocation, lobbying, and growth

Public expenditure allocation, lobbying, and growth

The effects of automation and lobbying in wage inequality: a directed technical change model with routine and non-routine tasks

Aiding refugees, aiding peace?

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