My thesis develops three models of political economy, examining different factors that affect equilibrium in political markets. The first paper develops a model based on that of Moutos (2001) whereby a government must choose between a tariff and an income tax in order to raise revenue to finance redistribution from rich to poor. I use a simple median voter model of political economy to show that an income tax may be preferred if it can raise more money than the tariff. This result links well with the empirical observation that more liberal trade regimes are often associated with larger government sizes. The second paper explores the idea of interactions between different parts of a political party’s platform and the benefit that different groups can receive from those policies. I show that even when parties have no predisposition towards any particular policy their policy announcements may differ due to the difference in demand for policy favours from special interests. I also discuss how this difference in demand can affect the relative success of interests groups and of the political parties themselves, and apply these results to a simple model of trade policy to show that left-wing parties proposing higher income tax rates may attract support from groups who support trade protection in developed countries. My third paper provides an extension to the well known model of special interest politics by Grossman and Helpman (1996). I introduce costly informative spending that special interests can use to convert uninformed voters into informed ones. This is advantageous to special interests when those being informed are of a similar political persuasion to the interest group members, thus skewing equilibrium policies towards the group’s objectives.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:579187 |
| Date | January 2013 |
| Creators | Allen, Thomas |
| Contributors | Garino, Gaia |
| Publisher | University of Leicester |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://hdl.handle.net/2381/28097 |
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