Oiligarchy and Capture Theory

While discussing capture theory and the work of Stigler, Peltzman, and Olson in class, I was reminded of a computer game I used to play in middle school called Oiligarchy. While the game might peddle a few unhinged conspiracy theories, it is also an accurate parody of capture theory.

As the player, you are an international oil tycoon seeking to maximize profit by passing oil-friendly taxes, subsidies, and price controls, as well as starting wars and destroying rainforests. In order to pursue these interests and to encourage "oiled" policy, you must donate to the "donkey party" or the "elephant party" during elections to capture representatives and the president. If the party you support wins the election, you can leverage your coercive power by deregulating oil production in Alaska or starting an international war to gain control of oil reserves abroad. However, you are also forced to balance these pursuits by maintaining of your favored party's popularity. If your party loses an election, you risk allowing costly isolationist and environmental policy to pass under the "eco reps".

The basic tenet of Oiligarchy aligns with Stigler's central argument that, "regulation is acquired by the industry and is designed and operated primarily for its benefit." In the game, a smart player maximizes their political donations to consistently earn political favors. At the same time, in Peltzman's terms, the game's two political parties attempt to maximize their majorities by accepting political donations from the player. In the objective function, M = (f x n) - h(N - n), the members of the Oiligarchy attempt to maximize f (the probability a beneficiary of the regulation supports the representative) and minimize h (the probability that popularity will decline). Due to the simplicity of the game, the "oligarchy" is actually a monopoly and the player is easily able to find Olson's so-called T*, or optimal amount of collective action. By donating a few hundred dollars in each election, one can expect to "capture" enough reps and the president.