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Endogenous Lobbying

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Author Info
Leonardo Felli
Antonio Merlo

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Abstract

In this paper we present a citizen-candidate model of representative democracy with endogenous lobbying. We find that lobbying induces policy compromise and always affects equilibrium policy outcomes. In particular, even though the policy preferences of lobbies are relatively extreme, lobbying biases the outcome of the political process toward the centre of the policy space, and extreme policies cannot emerge in equilibrium. Moreover, in equilibrium, not all lobbies participate in the policy-making process.

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Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Theoretical Economics Paper Series with number 448.

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Date of creation: Feb 2003
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Handle: RePEc:cep:stitep:448

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Keywords: Endogenous lobbying citizen-candidate model representative democracy.

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Helpman, E. & Persson, T., 1998. "Lobbying and Legislative Bargaining," Papers 08-98, Tel Aviv.
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  2. Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Wittman, Donald, 1977. "Candidates with policy preferences: A dynamic model," Journal of Economic Theory, Elsevier, vol. 14(1), pages 180-189, February. [Downloadable!] (restricted)
  4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September. [Downloadable!] (restricted)
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  5. Osborne, Martin J & Slivinski, Al, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 65-96, February. [Downloadable!] (restricted)
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  6. Levy, Gilat, 2004. "A model of political parties," Journal of Economic Theory, Elsevier, vol. 115(2), pages 250-277, April. [Downloadable!] (restricted)
  7. Diermeier, Daniel & Merlo, Antonio, 2000. "Government Turnover in Parliamentary Democracies," Journal of Economic Theory, Elsevier, vol. 94(1), pages 46-79, September. [Downloadable!] (restricted)
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  8. Daniel Diermeier & Michael Keane & Antonio Merlo, 2002. "A Political Economy Model of Congressional Careers," PIER Working Paper Archive 04-037, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2004. [Downloadable!]
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  9. Grossman, Gene M & Helpman, Elhanan, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Blackwell Publishing, vol. 63(2), pages 265-86, April. [Downloadable!] (restricted)
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  10. Bagnoli, Mark & Lipman, Barton L, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Blackwell Publishing, vol. 56(4), pages 583-601, October. [Downloadable!] (restricted)
  11. Tim Besley & Stephen Coate, . ""An Economic Model of Representative Democracy''," CARESS Working Papres 95-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences. [Downloadable!]
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  12. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-69, August.
  13. Alesina, Alberto, 1988. "Credibility and Policy Convergence in a Two-Party System with Rational Voters," American Economic Review, American Economic Association, vol. 78(4), pages 496-805, September.
  14. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February. [Downloadable!] (restricted)
  15. Massimo Morelli, 2004. "Party Formation and Policy Outcomes under Different Electoral Systems," Review of Economic Studies, Blackwell Publishing, vol. 71, pages 829-853, 07. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Vincent Anesi, 2007. "Moral Hazard and Free Riding in Collective Action," Discussion Papers 2007-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  2. Keefer, Philip, 2001. "When do special interests run rampant ? disentangling the role in banking crises of elections, incomplete information, and checks and balances," Policy Research Working Paper Series 2543, The World Bank. [Downloadable!]
  3. Börner, Kira, 2004. "Political Economy Reasons for Government Inertia: The Role of Interest Groups in the Case of Access to Medicines," Discussion Papers in Economics 313, University of Munich, Department of Economics. [Downloadable!]
  4. Topi Miettinen & Panu Poutvaara, 2006. "Political Parties and Network Formation," IZA Discussion Papers 1918, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Redoano, Michela, 2003. "Does Centralisation Affect The Number And Size Of Lobbies?," The Warwick Economics Research Paper Series (TWERPS) 674, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  6. Topi Miettinen & Panu Poutvaara, 2007. "Political Parties and Rent-seeking through Networks," Discussion Papers on Strategic Interaction 2006-28, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  7. Martimort, David & Semenov, Aggey, 2008. "Ideological Uncertainty and Lobbying Competition," MPRA Paper 6992, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  8. Giorgio Bellettini & Hubert Kempf, 2008. "Why not in your Backyard? On the Location and Size of a Public Facility," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  9. Afontsev Serguey, 2004. "Political economy of tariff unification: the case of Russia," EERC Working Paper Series 04-12e, EERC Research Network, Russia and CIS. [Downloadable!]
  10. Antonio Merlo, 2005. "Whither Political Economy? Theories, Facts and Issues," PIER Working Paper Archive 05-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005. [Downloadable!]
  11. Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Entry and Asymmetric Lobbying: Why Governments Pick Losers," CEP Discussion Papers dp0791, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  12. Bordignon, Massimo & Colombo, Luca & Galmarini, Umberto, 2003. "Fiscal Federalism and Endogenous Lobbies' Formation," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  13. Boerner, Kira, 2005. "Having Everyone in the Boat May Sink it - Interest Group Involvement and Policy Reforms," Discussion Papers in Economics 730, University of Munich, Department of Economics. [Downloadable!]
  14. Jon X. Eguia, 2003. "Is the Status Quo Relevant in a Representative Democracy?," Working Papers 1176, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  15. Reuben E., 2002. "Interest groups and politics: The need to concentrate on group formation," Public Economics 0212001, EconWPA. [Downloadable!]
  16. Houda Haffoudhi, 2005. "The logic of two-level games with endogenous lobbying : the case of international environmental agreements," Cahiers de la Maison des Sciences Economiques j05054, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  17. Gil S. Epstein & Shmuel Nitzan, 2005. "Lobbying and Compromise," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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