The name is absent

If φ_o is sufficiently large, reflecting a small dispersion of the ideological preferences
of outsiders, we may have φ_o > φ_i+φαiψh². In that case it follows from (A.10) that
the individual outsider is politically more influential than the individual insider,
as noted in section 2.4. However, in the benchmark case where φ_o = φ_i = φ,
(A.10) simplifies to equation (2.20) in the text, representing the situation where
lobby members have greater political power.

Appendix 2. The political equilibrium

This appendix explains the derivation of the political equilibrium presented
in section 3.1 and reports some comparative-static results which are used in the
proofs of the propositions stated in Appendix 3.

Using (2.20), (2.21) plus the facts that Ui = U_g = u (W + rk) + g (G) and
G = α, we construct the Lagrangian £ corresponding to the maximisation problem
specified at the start of section 3.1,

$ = ɪ + αipi £u (W + rk) + g (α) - UB]

2

+λ [τ (1- α) k (r + τ) - αW]+η [W - w (r + τ)] ,

where η is the Kuhn-Tucker multiplier associated with the recruitment constraint
W ≥ w. Exploiting (2.13), (2.14) and the fact that (1 — α) k = k in symmetric
capital market equilibrium, we find the first-order conditions for maximisation
with respect to W, α and τ to be

d$/dW = 0 =⇒ [αipi + (α — αi) p_o] ug — αλ + η = 0,        (A.11)

d$/da = 0 =⇒   [αipi + (1 — αi) po] g⁰ + Po (ug — up) — λ (τk + W)

[kαiug (pi — po) + kαpo Ug^f_g — u'_p) + λτ (1 — α) k⁰ + ηk] = 0,

(A.12)

∂$/дт = 0 =⇒ λ (1 — α)(k + τk⁰) + ηk — (1 — α) kp_ou'_p

33

<<   32   33   34   35   36   37   38   >>

More intriguing information