How a Firm Can Induce Legislators to Adopt a Bad Policy
AbstractThis paper shows why a majority of legislators may vote for a policy that benefits a firm but harms all legislators. The firm may induce legislators to support the policy by suggesting that it is more likely to invest in a district whose voters or representative support the policy. In equilibrium, no one vote may be decisive, so each legislator who seeks the firm’s investment votes for the policy, though all legislators would be better off if they all voted against the policy. Moreover, when votes reveal information about the district, the firm’s implicit promise or threat can be credible. Unlike influence mechanisms based on contributions or bribes, the behavior considered is time consistent and in line with the observed small spending by special interests.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3788.
Date of creation: 2012
Date of revision:
lobbying; voting; special interests; credibility;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
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.:
- Faccio, Mara & Parsley, David C., 2009.
"Sudden Deaths: Taking Stock of Geographic Ties,"
Journal of Financial and Quantitative Analysis,
Cambridge University Press, vol. 44(03), pages 683-718, June.
- Crawford, Vincent P & Sobel, Joel, 1982.
"Strategic Information Transmission,"
Econometric Society, vol. 50(6), pages 1431-51, November.
- Bennedsen, Morten & Feldmann, Sven E., 2006.
"Informational lobbying and political contributions,"
Journal of Public Economics,
Elsevier, vol. 90(4-5), pages 631-656, May.
- Morten Bennedsen & Sven E. Feldmann, 2000. "Informational Lobbying and Political Contributions," CIE Discussion Papers 2000-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Bennedsen, Morten & Feldmann, Sven E., 2000. "Informational Lobbying And Political Contributions," Working Papers 08-2000, Copenhagen Business School, Department of Economics.
- Lohmann, Susanne, 1995. " Information, Access, and Contributions: A Signaling Model of Lobbying," Public Choice, Springer, vol. 85(3-4), pages 267-84, December.
- Alcalde, Jose & Dahm, Matthias, 2010.
"On the Complete Information First--Price Auction and its Intuitive Solution,"
22306, University Library of Munich, Germany.
- José Alcalde & Matthias Dahm, 2011. "On The Complete Information First-Price Auction And Its Intuitive Solution," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(03), pages 353-361.
- Milyo Jeffrey & Primo David & Groseclose Timothy, 2000. "Corporate PAC Campaign Contributions in Perspective," Business and Politics, De Gruyter, vol. 2(1), pages 1-15, April.
- Corchón, Luis C. & Dahm, Matthias, 2008.
"Foundations for contest success functions,"
2072/9493, Universitat Rovira i Virgili, Department of Economics.
- Luis Corchon & Matthias Dahm, 2009.
"Welfare maximizing contest success functions when the planner cannot commit,"
Economics Working Papers
we097343, Universidad Carlos III, Departamento de Economía.
- Corchón, Luis & Dahm, Matthias, 2011. "Welfare maximizing contest success functions when the planner cannot commit," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 309-317.
- Corchon, Luis, 2009. "Welfare Maximizing Contest Success Functions when the Planner Cannot Commit," MPRA Paper 18761, University Library of Munich, Germany.
- Corchón, Luis C. & Dahm, Matthias, 2010. "Welfare Maximizing Contest Success Functions when the Planner Cannot Commit," Working Papers 2072/148481, Universitat Rovira i Virgili, Department of Economics.
- Andrew Yates, 2011. "Winner-pay contests," Public Choice, Springer, vol. 147(1), pages 93-106, April.
- Grossman, G.M. & Helpman, E., 1992.
"Protection for Sale,"
162, Princeton, Woodrow Wilson School - Public and International Affairs.
- Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
- Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
- B. Douglas Bernheim & Antonio Rangel & Luis Rayo, 2006. "The Power of the Last Word in Legislative Policy Making," Econometrica, Econometric Society, vol. 74(5), pages 1161-1190, 09.
- Matthias Dahm & Nicolás Porteiro, 2006.
"Side Effects of Campaign Finance Reform,"
06.15, Universidad Pablo de Olavide, Department of Economics.
- Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
- Matthias Dahm & Nicolas Porteiro, 2005.
"Informational Lobbying under the Shadow of Political Pressure,"
1409, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthias Dahm & Nicolás Porteiro, 2008. "Informational lobbying under the shadow of political pressure," Social Choice and Welfare, Springer, vol. 30(4), pages 531-559, May.
- Matthias Dahm & Nicolás Porteiro, 2006. "Informational Lobbying under the Shadow of Political Pressure," Working Papers 06.14, Universidad Pablo de Olavide, Department of Economics.
- Raff, Horst & Srinivasan, Krishna, 1998. "Tax incentives for import-substituting foreign investment:: Does signaling play a role?," Journal of Public Economics, Elsevier, vol. 67(2), pages 167-193, February.
- Carolyn L. Evans, 2009. "A Protectionist Bias In Majoritarian Politics: An Empirical Investigation," Economics and Politics, Wiley Blackwell, vol. 21(2), pages 278-307, 07.
- Thomas Schwartz, 1987. "Your vote counts on account of the way it is counted: An institutional solution to the paradox of not voting," Public Choice, Springer, vol. 54(2), pages 101-121, January.
- Lapp, Miriam, 1999. " Incorporating Groups into Rational Choice Explanations of Turnout: An Empirical Test," Public Choice, Springer, vol. 98(1-2), pages 171-85, January.
- Stratmann, Thomas, 1998. "The Market for Congressional Votes: Is Timing of Contributions Everything?," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 85-113, April.
- Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.