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Interest groups: Interest groups are organized associations that advocate for specific causes, representing shared interests or concerns of their members to influence public policies. See also Democracy, Deliberative Democracy, Society, Interests, Politics.
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Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

 
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Public Choice Theory on Interest Groups - Dictionary of Arguments

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Interest Groups/Public choice theory/Farber: The problem of selective participation has been a particular focus of public choice theory. To illustrate the problem, consider the situation of a regulated monopoly.
Monopolies: The monopolist does not need to overcome any >collective action
problem in order to take political action, since a single entity encompasses an entire industry. But its consumers may find it difficult to organize in order to obtain an effective political voice because of the free-rider problem.
Minorities/majority: Thus, collective action problems may allow concentrated minority interests such as monopolists to exploit diffuse majorities. Interest group theories predate public choice but have been a focal point of one prong of public choice scholarship (Eskridge, Frickey, and Garrett, 2006(1), pp. 85-9). Early public choice theorists told a simple and very plausible story about the differential political power of groups (Mashaw, 2010(2)).
Transaction costs: Organizing a group involves transaction costs, including the need to motivate participation in the face of incentives to free-ride. It seems very reasonable to postulate that these costs increase along with the size of the group, all else being equal. It is obviously easier to get one person with a $ 1000 stake to join an organization and take action than it is to get a thousand people with $1 stakes to do so (Stearns and Zywicki, 2009(3), pp. 55-62).
Small groups: Early public choice theorists then concluded that politics would be dominated by smaller, easily organized special interests at the expense of the public as a whole (Stigler, 1971)(4).
So government should mostly function as a mechanism for transferring wealth from the public to special interest groups of various kinds (Mashaw, 2010)(2).
Vs: This is a seductive argument but turns out to be far too facile, as well as inconsistent with much recent evidence about collective action (Ginsburg, 2002(5), pp. 1144-1149).
Environmental groups: It suggests, for instance, that environmental groups should not form at all, and that environmental legislation should not exist. Yet groups such as the Sierra Club are very much alive and well, and industry complains constantly about the burdens created by environmental legislation (Mashaw, 2010(2), pp. 28-31; Croley, 2010(6), pp. 52-53).
On closer examination, the story of special interest dominance has many holes (Croley, 2010)(6). While small groups have advantages, so do large ones: in particular, large groups represent many voters, whose support is needed by politicians.
The question of just how organizations influence political outcomes remains unanswered: putting aside outright bribery, they presumably benefit politicians by supporting their re-election, but we need an explanation of how they are able to do so more effectively as organizations than their individual members could achieve on their own (Croley, 2010(6), p. 58). The theory also does not do well at explaining the existence of even relatively small groups: enough individual members of the group still have enough of an incentive to free-ride to make the group's viability seem questionable. Finally, small groups may sometimes act as proxies
Parisi I 185
for the broader public interest, so the activities of these small groups may actually improve social welfare. For instance, producer groups may favor trade barriers, but large retailers such as Walmart have an interest in opposing those barriers that often coincides with the interests of their consumers. >Political elections/Public choice theory.

1. Eskridge, W. N., P. P. Frickey, and E. Garrett (2006). Legislation and Statutory Interpretation.
2nd edition. St. Paul, MN: Foundation Press.
2. Mashaw, J. (2010). "Public Law and Public Choice: Critique and Rapprochement," in D. A.
Farber and A. J. O'Connell, eds., Research Handbook on Public Choice and Public Law, 19-48. Northampton, MA: Edward Elgar.
3. Stearns, M. L. and T. J. Zywicki (2009). Public Choice Concepts and Applications in Law. St.
Paul, MN: Thomas Reuters.
4. Stigler, G. J. (1971). "The Theory of Economic Regulation." Bell Journal of Economics and
Management Science 2(1):3-21.
5. Ginsburg, T. (2002). "Ways of Criticizing Public Choice: The Uses of Empiricisms and the
Theory in Legal Scholarship." University of Illinois Law Review 4: 1 139-1166.
6. Croley, S. (2010). "Interest Groups and Public Choice," in D. A. Farber and A. J. O'Connell,
eds., Research Handbook on Public Choice and Public Law, 49—86. Northampton, MA: Edward Elgar.

Farber, Daniel A. “Public Choice Theory and Legal Institutions”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press

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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Public Choice Theory
Parisi I
Francesco Parisi (Ed)
The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017


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