5. Distribution of benefits and costs The Senate, the legislature of the fiction

Question

5. Distribution of benefits and costs The Senate, the legislature of the fictional country of Romange, is considering legislation that will generate benefits of $25 million and costs of $29 million. For perspective, Romange's population is 60 million Passing the legislation is , and if everyone in Rom ange shared equally in both its benefits and its costs, the Senate will vote the legislation. If the costs of the legislation are concentrated among a few people instead of widespread among the population, those people will be willing to spend up to the calculations of the few who experience the costs.) lobbying the Senate against the legislation. (Note: Assume that the benefits are widespread; therefore, you can ignore them in The less widely spread are the benefits of the legislation, the benefits is the likelihood of lobbying for the legislation by those who will incur its Suppose that, as before, the costs of the legislation are concentrated among a small group, the benefits are very widespread, and the Senate is responsive to lobbying. The likely amount spent on lobbying for the legislation is in which case the Senate will likely vote

Explanation / Answer

Passing the legislation is inefficent (total costs exceed the tottotal benefits), and if everyone in Verben shared equally in both its benefits and its costs, the Parliament will vote against (as it is not favourable) the legislation.

If the benefits of the legislation are concentrated among a few people instead of widespread among the population, those people will be willing to spend up to 25 million lobbying the Parliament for the legislation.

The less widely spread are the costs of the legislation, the higher is the likelihood of lobbying against the legislation by those who will incur its costs.

Suppose that, as before, the benefits of the legislation are concentrated among a small group, the costs are very widespread, and the Parliament is responsive to lobbying. The likely amount spent on lobbying against the legislation is 29 million , in which case the Parliament will likely vote against the legislation. ( Because costs exceed the benefits)

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