Special interests have an incentive to become informed about a policy from which they could receive concentrated benefits
Since other voters remain rationally ignorant of the policy, the special interests will have considerable influence in the legislature. Will special interests receive everything they want from the legislature? Why or why not? How will the legislature determine what the special interests will receive?
Special interests will not likely get everything they want because there are often special interests on both sides of an issue. So even if most voters remain rationally ignorant, special interests who stand to be harmed by the enactment of a policy will devote effort to stopping the policy by imposing political costs on the legislature. Legislators will give the special interests what they want until the marginal political benefit of doing so is equal to the marginal political cost.
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Which of the following statements is correct?
A) Monopolies are guaranteed to earn an economic profit. B) The market demand and the firm's demand are the same for a monopoly. C) Monopolies have perfectly inelastic demand for the product sold. D) Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. E) Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve.
If the nominal interest rate is 5.6 percent and the rate of inflation is 7.1 percent in a given year, then what is the corresponding real rate of return?
A) 12 .7 percent B) 1.5 percent C) -1.5 percent D) -12.7 percent
A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?
a. The pollution will be created by those least willing and able to pay the damages. b. The pollution will be created by those most willing and able to pay for the right to pollute. c. The funds collected by the government will be enough to compensate any individuals harmed by the pollution. d. Pollution will increase from zero to 1,000 units per day.
Answer the next question on the basis of the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10%. If the price of this bond increases to $1,250, the interest rate will
A. rise to 11%. B. fall to 9%. C. rise to 12%. D. fall to 8%.