A Welfare Analysis of Political Action

By Susanne Lohmann
1991| Working Paper No. 1132

In earlier work, I examine the situation where information pertinent to political decisions is dispersed among the members of a society. Rational, self-interested individuals may take costly political action to signal their private information to political decision-makers. The revelation of information reduces the variability of policy outcomes, but involves deadweight costs privately incurred by the activists. This paper develops a welfare analysis of the political action equilibria characterized in my earlier work. I identify a number of sources that render the equilibrium supply of political action socially suboptimal. Perhaps surprisingly, costly political action can be under or oversupplied in equilibrium.