Introduction

The participation of interest groups in public policy making is unavoidable. No society can be so repressed – nor individual's power so extreme – that decisions are undertaken by a narrow clique of individuals, without consideration of others. Its inevitable nature is only matched by the universal suspicion with which it has been seen by both policy makers and the public. Recently, however, there has been an increase in literature which examines the participation of interest groups in public policy making from a new institutional economics (NIE) perspective. The distinguishing feature of the NIE approach, as it is understood today, is its emphasis on opening up the black box of decision making with reference to, among other things, understanding the rules and the play of the game. Indeed, as Oliver Williamson (2000) says, “NIE has progressed not by advancing an overarching theory but by uncovering and explicating the micro-analytic features [of institutions] to which Arrow refers and by piling block upon block until the cumulative value added cannot be denied.”

Thus, in this chapter we do not attempt to describe the vast literature on interest groups' behavior. Instead, we review recent papers that follow Williamson's NIE mantra. That is, these papers attempt to explicate the micro-analytic features of the way interest groups actually interact with policy makers, rather than providing an abstract high-level representation.