Working Papers, Santa Cruz Center for International Economics 09-06
We develop a variation of the Grossman-Helpman Protection for Sale model, where organized groups, representing various sectors of the economy, influence government policy. In particular, this paper focuses on the rise of food prices and a greater level of influence of a food sector lobby, relative to other political lobbies- and general consumer welfare. Governments, when considering their objectives, must consider food security along with consumer welfare and the objectives of other special-interest groups. We find that, as government emphasizes domestic food security, lobbies representing the food sector gain influence at the expense of other, non-food lobbies and the general population. In this framework, technology plays an important role. Technology, by increasing the rate at which the economy expands, allows government to reap the rewards of special interest participation in policy formation while increasing national welfare.