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Campaign spending with office-seeking politicians, rational voters, and multiple lobbies

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Author Info
Prat, A. (Tilburg University, Center for Economic Research)

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Abstract

I introduce a microfounded model of campaign finance with office-seeking politicians, a continuum of voters, and a large number of heterogeneous lobbies. Lobbies make contributions to politicians according to a common agency framework. Politicians use contributions to finance their electoral expenditures. Voters are not fooled by electoral expenditures: they are influenced in a way that is consistent with the equilibrium behavior of lobbies and politicians. The model is used to: (i) determine the relation between campaign spending and political deadweight; (ii) show the informational value of lobbies' contributions; (iii) evaluate the welfare implications of restricting campaign spending; and (iv) interpret the empirical finding that campaign expenditures have a very low effect on election outcome. One can say that this model makes the best case in favor of campaign contributions. Nevertheless, under reasonable parameter values, a ban on campaign contributions is welfare-improving.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 123.

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Date of creation: 1998
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Handle: RePEc:dgr:kubcen:1998123

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Find related papers by JEL classification:
M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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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.:
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  4. Levitt, Steven D, 1994. "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 777-98, August. [Downloadable!] (restricted)
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  12. Levitt, Steven D, 1995. "Policy Watch: Congressional Campaign Finance Reform," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 183-93, Winter. [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. Gautier, P. & Soubeyran, R., 2006. "Political Cycles : Issue Ownership and the Opposition Advantage," Working Papers 200613, UMR MOISA : Marchés, Organisations, Institutions et Stratégies d'Acteurs : CIHEAM-IAMM, CIRAD, INRA, Montpellier SupAgro, IRD - Montpellier, France. [Downloadable!]
    Other versions:
  2. Matthias Dahm & Nicolás Porteiro, 2006. "Side Effects of Campaign Finance Reform," Working Papers 06.15, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
    Other versions:
  3. Andrea Prat & Riccardo Puglisi & James Snyder, 2005. "Is Private Campaign Finance a Good Thing? Estimates of the Potential Informational Benefits," Levine's Working Paper Archive 122247000000000960, David K. Levine. [Downloadable!]
  4. Stephen Coate, 2003. "Power-hungry Candidates, Policy Favors, and Pareto Improving Campaign Finance Policy," NBER Working Papers 9601, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Reuben E., 2002. "Interest groups and politics: The need to concentrate on group formation," Public Economics 0212001, EconWPA. [Downloadable!]
  6. Thomas Stratmann, 2003. "Tainted Money? Contribution Limits and the Effectiveness of Campaign Spending," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Pascal Gautier & Raphael Soubeyran, 2005. "Political Cycles: the Opposition Advantage," Public Economics 0510019, EconWPA. [Downloadable!]
    Other versions:
  8. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June. [Downloadable!]
  9. Elena Panova, 2007. "Congruence Among Voters and Contributions to Political Campaigns," Cahiers de recherche 0722, CIRPEE. [Downloadable!]
  10. Ivan Pastine & Tuvana Pastine, 2006. "Politician Preferences and Caps on Political Lobbying," Working Papers 200619, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  11. Campante, Filipe, 2007. "Redistribution in a Model of Voting and Campaign Contributions," Working Paper Series rwp07-045, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  12. Juan Carlos Berganza, 2000. "Politicians, voters and electoral processes: an overview," Investigaciones Economicas, Fundación SEPI, vol. 24(3), pages 501-543, September. [Downloadable!]
  13. DAHM, Matthias & PORTEIRO, Nicolas, 2003. "The political economy of interest groups: pressure and information," CORE Discussion Papers 2003057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
    Other versions:
  14. Daniel Houser & Thomas Stratmann, 2006. "Selling Favors in the Lab: Experiments on Campaign Finance Reform," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  15. Costas Roumanias, 2008. "Auctioning Public Office," Discussion Paper Series 2008_08, Department of Economics, University of Macedonia, revised Sep 2008. [Downloadable!]
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