The Effect of the Internet on Political Institutions

The phenomenal growth of the use of the Internet is evidence of a dramatic decrease in the cost of certain types of communication that such use engenders. Political and economic activities that are relatively communications-intensive are likely to be dramatically affected bu these cost changes. This paper explores the effect of lower communications costs enabled by the Internet on politicians' incentives and on political institutions, Predictions are drawn from three specific models of political economy: a Peltzman/Stigler generalized theory of regulation; Becker's theory of interest group competition; and Spiller's theory of multiple principal-single agent bureaucracy. In general, these theories predict smaller long-run amounts of political wealth transferring and a reduction in rent seeking. Finally, implications about which groups will benefit from Internet adoption in the shorter term are discussed. Copyright 1996 by Oxford University Press.