We present a dynamic model of the interaction between interest groups and policymakers, featuring endogenous interest group formation. We show that complicated dynamic patterns in economic policies may arise once interest group formation is taken into account. <BR><BR>

Municipalities may have various motives for decisions on the mode of their task execution. Empirical studies – based on both public choice and transaction costs theory - have not yet provided a fully comprehensive explanation for municipal contracting out decisions. Therefore, we held...

A committee makes a decision on a project on behalf of "the public." Members of the committee agree on the a priori value of the project, and hold additional private information about its consequences. They are experts who care about the value of the project and about being considered well...

A firm may induce voters or elected politicians to support a policy it favors by suggesting that it is more likely to invest in a district whose voters or representatives support the policy. In equilibrium, no one vote may be decisive, and the policy may gain strong support though the majority...

We identify the conditions under which voters can induce political parties to collect information and to select policies which are optimal from the representative voter’s point of view. We show that when parties are office motivated the voting rule should encourage parties to collect...

A well-known rationale for representative democracy is that direct democracy leads to a free-rider problem as to the collection of information. A problem with this rationale is that it takes for granted that representatives collect information. In this paper we examine whether or not electoral...

Interest groups are introduced in a spatial model of electoral competition between two political parties. We show that, by coordinating voting behavior,these interest groups increase the winning set, which is defined as the set of policy platforms for the challenger that will defeat the...

We develop a simple two period model to study the importance of motivational differences among politicians in describing the role of elections and explaining policy choices. In our model, politicians differ in their motives of running public office. Good politicians care about policies while bad...

Interest groups are introduced in a spatial model of electoral competition between two political parties. We show that the presence of these interest groups increases the winning set, which is the set of policy platforms for the challenger that will defeat the incumbent. Therefore interest...