When economic actors are also allowed to become politically active, perhaps to influence a government price policy, they face decision problems with essentially simultaneous political and economic features. If, in addition, two groups struggle to pull the administered price level in opposite...

This paper generalizes the recent political economy model of Helpman and Grossman in which contributions by producer lobbies and government decisions about trade policies are modeled as a common agency game. We allow the government to choose among domestic as well as trade interventions. When...

Governments often establish economic policy in response to political pressure by interest groups. Since these groups' political activities may alter prices, economies so affected cannot be characterized by perfect competition. We develop a model of a "lobbying economy" in which consumers' choice...