This paper studies the impact of lobbying on political competition and policy outcomes in a framework which integrates the citizen-candidate model of representative democracy with the menu-auction model of lobbying. Positive and normative issues are analysed. On the positive side, lobbying need have little or no effect on policy outcomes because voters can restrict the influence of lobbyists by supporting candidates with offsetting policy preferences. On the normative side, coordination failure among lobbyists can result in Pareto inefficient policy choices. In addition, by creating rents to holding office, lobbying can lead to “excessive” entry into electoral competition.

This paper provides a comprehensive treatment of a basic income maintenance problem for a group of individuals who differ in their income generating abilities. It stresses the impact that imperfect information about such abilities has on programme design. The analysis serves two purposes. First, we are able to unify the theoretical literature on the income maintenance problem. Second, we examine the impact of allowing the government to impose workfare on recipients of income support. In addition to being of policy interest, this is a theoretically challenging problem since it requires solving a multi-dimensional screening problem. The solution that we find is strikingly simple. It separates the poor into two categories, with the lower income groups subject to workfare while facing a 100% marginal tax rate on earnings. The second group does no public work and is offered a benefit schedule which taxes earnings at a lower rate.

This paper examines the allocative performance of rotating savings and credit associations (roscas), a financial institution which is observed world-wide. We develop a model in which individuals save for an indivisible good and study roscas which distribute funds using random allocation and bidding. The allocations achieved by the two types of rosca are compared with that achieved by a credit market and with efficient allocations more generally. We find that neither type of rosca is efficient and that individuals are better off with a credit market than a bidding rosca. Nonetheless, a random rosca may sometimes yield a higher level of ex ante expected utility to prospective participants than would a credit market.