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Magee, C. and Magee, S. (203) The Effects of Rent Seeking on Economic Development: An Increasing Divergence Between Rich and Poor Countries? In: Ramaswamy, S. and Cason, J.W., Eds., Development and Democracy, Middlebury College Press, Hanover, 123-144.

has been cited by the following article:

• TITLE: Lobbying Is a Biologically Necessary Transaction Cost in a Democracy

  AUTHORS: Stephen P. Magee, Kwang-Yeol Yoo

  KEYWORDS: Tariffs, Lobbying, Democracy, Dominance Hierarchies, Biological Metaphors, Rent Seeking

  JOURNAL NAME: Modern Economy, Vol.10 No.6, June 30, 2019

  ABSTRACT: We explain why lobbying is a biologically necessary transaction cost in a democracy. We use lobbying for trade protection to illustrate because we have controls for other effects by using the Young and Magee [2] general equilibrium international trade model with 2 goods, 2 factors, 2 lobbies and 2 political parties, all maximizing in a game theoretic equilibrium. Our empirical estimates show that protectionist lobbying costs are low: 0.8 of one percent in our advanced countries and 0.2 of one percent for the US. There are political economy explanations for lobbying and corruption: money creates power and power creates money. There are biological explanations for lobbying: humans are carnivores and compete for power like animals in dominance hierarchies. Using both explanations, competitive lobbying is an equilibrium outcome. Our data focus on capital intensive exports compared to import-competing industries in 8 non-EC OECD countries in 1965 and 1986 and factor intensities of production from wage and capital earnings in 3-digit level ISIC data.