Models of international unions suggest that large and rich countries reap little economic benefits from political integration with smaller and poorer countries. This paper challenges this view by presenting a formal study of economic influence by special interest groups in an international...

We construct a model where firms compete in both political and economic markets. In political markets, firms compete for influence over government transfer policy (rents). This activity can be beneficial for the firm, but is purely wasteful from the point of view of society because resources are...