Cartels, coalitions, and constitutional politics

James Buchanan and Dwight Lee

Constitutional Political Economy, 1991, vol. 2, issue 2, 139-161

Abstract: While every industry desires political protection against the rigors of competition, no industry would see advantage in having that protection generalized to the entire economy. The ideal from the perspective of a given industry is to receive protections for itself, while the remainder of the economy remains competitive. Such a priviledged outcome is not possible, of course, in a broadly democratic regime, and the industry that obtains protections for itself does so by joining into a coalition, explicit or otherwise, which obtains protections for everyone in the coalition. A simple model is developed in which an equilibrium coalition emerges. While it is obviously better for an industry to be in, rather than outside, such an existing coalition, it is shown that even those who are members of a protected coalition may be better off under a constitutional regime that prevents any industry from receiving protections against competition. Copyright George Mason University 1991

Date: 1991
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DOI: 10.1007/BF02404425

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