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The effectiveness of caps on political lobbying

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Author Info
Matejka, M.
Onderstal, S.
De Waegenaere, A. (Tilburg University, Center for Economic Research)

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Abstract

In this paper, we analyze a lobby game, modelled as an all-pay auction in which interest groups submit bids in order to obtain a political prize. The bids are restricted to be below a cap imposed by the government. For both an incomplete and a complete information setting we show the following results. While ex post a lower cap may lead to higher lobbying expenditures, ex ante a lower cap always implies lower expected total lobbying expenditures. The incompletely informed government maximizes social welfare by implementing a cap equal to zero.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 44.

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Date of creation: 2002
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Handle: RePEc:dgr:kubcen:200244

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  1. Arieh Gavious & Benny Moldovanu & Aner Sela, 2002. "Bid Costs and Endogenous Bid Caps," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 709-722, Winter.
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  2. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-51, June. [Downloadable!] (restricted)
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  3. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  4. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics. [Downloadable!]
  5. Onderstal, S., 2002. "Socially optimal mechanisms," Discussion Paper 34, Tilburg University, Center for Economic Research. [Downloadable!]
  6. Erwin Amann & Wolfgang Leininger, 1995. "Expected revenue of all-pay and first-price sealed-bid auctions with affiliated signals," Journal of Economics, Springer, vol. 61(3), pages 273-279, October. [Downloadable!] (restricted)
  7. Vijay Krishna & John Morgan, 1994. "An Analysis of the War of Attrition and the All-Pay Auction," Game Theory and Information 9409002, EconWPA. [Downloadable!]
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  8. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993. "Rigging the Lobbying Process: An Application of the All-Pay Auction," American Economic Review, American Economic Association, vol. 83(1), pages 289-94, March. [Downloadable!] (restricted)
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  9. Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
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  10. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May. [Downloadable!] (restricted)
  11. Potters, Jan & van Winden, Frans, 1992. " Lobbying and Asymmetric Information," Public Choice, Springer, vol. 74(3), pages 269-92, October.
  12. Laffont, Jean-Jacques & Robert, Jacques, 1996. "Optimal auction with financially constrained buyers," Economics Letters, Elsevier, vol. 52(2), pages 181-186, August. [Downloadable!] (restricted)
  13. McAfee, R Preston & McMillan, John, 1992. "Bidding Rings," American Economic Review, American Economic Association, vol. 82(3), pages 579-99, June. [Downloadable!] (restricted)
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    • McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  14. Cramton, Peter, 1998. "The Efficiency of the FCC Spectrum Auctions," Journal of Law & Economics, University of Chicago Press, vol. 41(2), pages 727-36, October.
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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. Matthias Dahm & Nicolás Porteiro, 2006. "Side Effects of Campaign Finance Reform," Working Papers 06.15, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
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  2. 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. [Downloadable!] (restricted)
    Other versions:
  3. Onderstal, S., 2002. "Socially optimal mechanisms," Discussion Paper 34, Tilburg University, Center for Economic Research. [Downloadable!]
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