American Economic Review: Vol. 96 No. 1 (March 2006)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


AER - All Issues

AER Forthcoming Articles

Inequality, Lobbying, and Resource Allocation

Article Citation

Esteban, Joan, and Debraj Ray. 2006. "Inequality, Lobbying, and Resource Allocation." American Economic Review, 96(1): 257-279.

DOI: 10.1257/000282806776157533


This paper describes how wealth inequality may distort public resource allocation. A government seeks to allocate limited resources to productive sectors, but sectoral productivity is privately known by agents with vested interests in those sectors. They lobby the government for preferential treatment. The government—even if it honestly seeks to maximize economic efficiency—may be confounded by the possibility that both high wealth and true economic desirability create loud lobbies. Broadly speaking, both poorer economies and unequal economies display greater public misallocation. The paper warns against the conventional wisdom that this is so because such governments are more "corrupt."

Article Full-Text Access

Full-text Article

Additional Materials

Link to Appendix (116.09 KB)


Esteban, Joan
Ray, Debraj

American Economic Review

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us