Governing Interest Groups and Rent Dissipation

In a contest of group‐specific public goods we consider the effect that managing an interest group has on the rent dissipation and the total expected payoffs of the contest. While in the first group there is a central planner determining its members’ expenditure in the contest, in the second group there are two different possibilities: either all the members are governed by a central planner or they are not. We consider both types of contests: an all‐pay auction and a Logit contest success function. We show that while governing an interest group decreases free‐riding, it may as well decrease the rent dissipation; at the same time the expected payoffs of the groups may also decrease.     

The Efficient and Fair Approval of "Multiple-Cost-Single-Benefit" Projects under Unilateral Information

This paper focuses on indivisible " multiple-cost-single-benefit " projects that must be approved by the government. A simple mechanism is proposed that ensures an efficient and fair implementation of such projects. The proposed mechanism is appropriate for a unilateral information structure: the single beneficiary has complete information on the cost and benefit of the project while the government official has no such information and the cost bearers have information only on each other's costs.