Special Interest Politics. .

• Author: Ting, Michael
• Position: Book Review

By Gene Grossman and Elhanan Helpman.

Cambridge, MA: MIT Press. 2001. Pp. xv, 364. $40.00.

Economic policy is rarely, if ever, the product of a single social welfare maximizer and is more often the creation of conflicting interest groups, voters, and election-minded politicians. Starting from this observation, Gene Grossman and Elhanan Helpman's Special Interest Politics looks at the strategic interaction of these actors in policy making. The result is a fairly comprehensive synthesis and extension of some of the most exciting game-theoretic work in political economics.

The book covers a range of topics, including elections, lobbying, and (to a lesser extent) legislative decision making. It begins by introducing the basic models of direct democracy and party competition. Variants of these models consider issues such as voter turnout, candidate uncertainty over voter preferences, voter uncertainty over their ideal policies, commitment, electoral systems, citizen candidates, partisanship, and multidimensional policy spaces. Of particular note is their "standard" model, which features two policy dimensions. On the first, party platforms are fixed, but parties do not know which platform will be more popular ex ante. On the second, parties can freely choose platforms. Voters belong to one of two groups, and voters within each group have identical preferences over the pliable issues (but not necessarily the fixed ones). Some group members are informed of the ideal pliable policy for their group, whereas others are uncertain of it. In equilibrium, party platforms converge to a weig hted average of the perceived ideals of the informed and uninformed group members, but groups benefit from an increase in informed members.

Of course, the supply of policy information is often endogenous to political competition, and the authors next address the strategic provision of information by interest groups to policy makers. Here the book provides a highly intuitive explanation of cheap talk and costly signaling games, which have become standard tools in this area of research. It also explores extensions such as multiple lobbyists, multidimensional uncertainty, and different types of signaling costs (in particular, access costs imposed by the policy maker). Whereas the players in these models consist only of a policy maker and one or more interest groups, Chapter 6 integrates some of their features into the standard model, so that informed special interests...