Political Parties:

    1.

    2.

    3.
 
 

    Public choice and political parties:
 
 
 

Interest Groups:
 
 
 

PAC (political action committee):
 
 
 
 

Types of Interest Groups:

        Economic:
 
 

        Non-economic:
 
 
 

Interest Group Resources:

        Size of membership.

        Financial Resources

        Organization.

        Intensity of interest.

Fundamental Problem of Interest Groups:  How to get organized?
 

        Free riding:
 
 

Some recent developments:

    1.  Greater use of money to influence the political process.

    2.  Increased ability of interest groups to influence policy decisions.

Examples of powerful interest groups:

American Medical Association
AFLl-CIO
National Rifle Association
American Civil Liberties Union
American Automobile Association

Interest groups represent many overlapping segments of society:  labor unions, women's rights groups, religious groups, trade associations, organizations for doctors, nurses, for lawyers, hunters, teachers, environmentalists, and farmers.
 

Interest Groups and Wealth Transfers:  (An example -- barbers):
 
 
 
 

       Barriers to entry:
 
 
 

     Wealth Transfer:
 
 
 

        Potential suppliers:
 
 
 
 
 
 

                    Public interest arguments:
 
 
 
 
 

       Graph:   How an Interest Group's Demands are Met:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The moral:
 
 
 

Note:  Not all interest groups are small, ex. are farmers, retired persons, etc..

Fundamental Point:  You can begin to explain why a certain law is passed if you try to answer two questions:

        1.

        2.

 
        Payoffs of Legislators by special interest may take many forms (see handout):

            1.

            2.
 

    One possible response:
 

Rent Seeking:
 
 

        Two kinds:
            1.
 

            2.
 

When rent-seeking or lobbying succeedss, society is worse off for two reasons:

        1.
 
 
 
 

        2.
 
 
 
 
 

    Defensive lobbying:
 
 

    Distinguish between bribary and rent-seeking:
 
 

    Distinguish between rent-seeking and advertising:
 
 

The Analytics of Rent Seeking:

    Monopoly rent:
 

            The market and rents vs. rent-seeking and rents (a comparison):
 
 
 
 
 

            Efficiency loss (welfare loss) from monopoly:
 

            X-Inefficiency:
 

            Tullock's rent-seeking loss of monopoly:
 
 
 

Consumer Reaction to Rent Seeking:
 
 

        Example:  The import tariff
 
 
 
 
 
 
 

        Two Sets of rent seekers:

            1.  rice producers

            2.  beneficiaries of the additional government revenue
 
 
 
 

        Collective Decision-Making Costs:
 

                Personal costs and collective costs:
 

        Rent-seeking loss:
 
 

Classifying Rent Seekers:  An Example of Taxis: (James Buchanan)
 

    Taxi Drivers as Rent Seekers:
 
 
 
 
 
 
 
 
 

    Commission Members as Rent Seekers:
 
 
 
 
 
 
 
 
 
 

    Politicians as Rent Seekers:
 
 
 
 
 
 
 

    Recipients of Services and Taxpayer Groups as Rent Seekers:
 
 
 
 
 
 
 
 
 

Redistributional Rent Seeking: