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Erschienen in:
2019 | OriginalPaper | Buchkapitel
15. Political Economics of Public Pricing of Final and Intermediate Goods
verfasst von : Tsuyoshi Shinozaki, Mitsuyoshi Yanagihara
Erschienen in: Advances in Local Public Economics
Verlag: Springer Singapore
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Abstract
In this chapter, we study the effect of lobbying by special interest groups on the optimal pricing rule of publicly produced final and intermediate goods. We show that when the weight that the government places on campaign contributions from a special interest group organized by workers increases, the price of publicly produced final goods decreases and that of intermediate goods increases. However, when the weight that the government places on campaign contributions from a special interest group organized by capitalists increases, the effect on the prices of final and intermediate goods depends on capitalists’ roles as both consumers and owners of firms. The effects of lobbying by workers and capitalists are asymmetric because the public enterprise must adhere to its budget constraint and because the roles of capitalists and workers in the economy differ.