For the definition of Lie groupoid see https://en.wikipedia.org/wiki/Lie_groupoid .
In this question I want to understand Example 1.1.17 in "General theory of Lie groupoid and Lie algebroids" by Kirill C. H. Mackenzie (page 10).
Let $G$ be a Lie group with Lie algebra $\mathfrak{g}$. I want to see how $T^* G$ (the cotangent bundle) is a groupoid with base $\mathfrak{g}^*$ (the dual of Lie algebra? which is the dual of $\mathfrak{g}$ as a vector space endowed with Lie brackets?) Let $L_g : h \mapsto gh$ and $R_g : h \mapsto hg$ be left and right translations on $G$.
We consider $\theta \in T_g^\ast G$. This is a linear functional on $T_g G$ the tangent space of $G$ at the point $g$. $T_g G$ is isomorphic to $T_e G = \mathfrak{g}$.
Recall the for every arrow $f : x \to y$ we have source and target maps: $\alpha(f)=s(f)=x$ and $\beta(f)=t(f)=y$. In the example the book defines them as follows $$ \alpha(\theta) = \theta \circ T(L_g) , \quad \beta(\theta) = \theta \circ T(R_g) \ . $$ I assume in $T(L_g)$ he means the differential map induced by $L_g$, that is $$ T(L_g)(x) = g + x \ . $$ I don't understand the reasoning behind the $\alpha$ and $\beta$ he defined and how they return an object in $\mathfrak{g}^*$. What is happening there?
Finally, the book defines the multiplication of $\theta \in T_g^* G$ and $\varphi \in T_h^*G$ (there are no assumptions on $g$ and $h$) as $$ \varphi \bullet \theta = \varphi \circ T(R_{g^{-1}}) = \theta \circ T(L_{h^{-1}}) \ .$$ I don't see how this product is a valid multiplication at all. The books then claim that with these definitions $T^* G \rightrightarrows \mathfrak{g}^*$ is a Lie groupoid. I don't understand how. First we need to show it is a groupoid, then that the relevant maps are smooth etc.
In this post, we'll worry about smoothness of everything. My original post already shows that what you have described is actually a groupoid, so this is the only step remaining in showing it's a Lie groupoid. I am much more comfortable with manifolds than categories, so this post will be much less computationally involved because I grok the big picture a lot better here.
To begin with, I'll use the standard fact:
We will let $\pi:G\times\mathfrak{g}^\ast\rightarrow \mathfrak{g}^\ast$ denote the other projection.
Using this, we can prove that the source and target maps, $s,t:T^\ast G\rightarrow \mathfrak{g}^\ast$ are smooth submersions. To begin with, we have
Proposition: We have $s = \pi \circ L$ and $t = \pi \circ R$.
Proof: We'll only prove the claim about the source map. For $\theta \in T^\ast_g G$, we have \begin{align} \pi(L(\theta)) &= \pi(g, L^\ast_g \theta) \\ &= L^\ast_g \theta\\ &= \theta \circ d_e L_g \\ &= s(\theta) \end{align}
Now, since $L$ is a bundle isomorphism, it is, in particular, a diffeomorphism. Hence, $\pi$ and $s$ have the same analyitical properties. But $\pi$ is obviously a smooth submersion, so this proves $s$ is. An analogous argument shows $t$ is.
We now argue the identity map $id:\mathfrak{g}^\ast \rightarrow T^\ast G$ is smooth. Recall that for $f\in \mathfrak{g}^\ast$, $\operatorname{id}(f) = f\in T_e^\ast G \subseteq T^\ast G$. Let $i$ denote the inclusion of $\mathfrak{g}^\ast= T^\ast_g G$ into $T^\ast G$. Then we have $\operatorname{id} = L^{-1}\circ i = R^{-1}\circ i$, so $\operatorname{id}$ is a composition of smooth functions so is smooth.
Finally, we argue that composition is smooth. Note that $\operatorname{comp}$ is only a partial function from $T^\ast G\times T^\ast G\rightarrow T^\ast G$, but we'll extend it total function in the following way: For $\theta \in T^\ast_g G$ and $\varphi\in T^\ast_h G$, we define $$\operatorname{comp}(\theta, \varphi) = \theta \circ d_{hg}L_{h^{-1}} = L_{h^{-1}}^\ast \theta.$$ (This may or may not equal $\varphi \circ d_{hg}R_{g^{-1}}$, depending on whether $t(\varphi)= s(\theta)$ or not). We'll show that this total function is smooth, hence, that the partial function is as well.
By considering $L\circ \operatorname{comp} \circ L^{-1}$, we get a map $$(G\times \mathfrak{g}^\ast) \times (G\times \mathfrak{g}^\ast) \rightarrow G\times \mathfrak{g}^\ast$$ which, chasing through all the definitions, maps $\big( (g, \theta), (h,\varphi)\big)$ to $(hg, \theta)$. Since group multiplication is smooth, $L\circ \operatorname{comp}\circ L^{-1}$ is smooth, and thus, so is $\operatorname{comp}$.
Since all the associated maps are smooth and the source and target maps are submersions, this (together with my previous post) shows that $T^\ast G\rightrightarrows \mathfrak{g}^\ast$ really is a Lie groupoid.