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The Effectiveness of Caps on Political Lobbying

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Author Info

  • Matejka, M.
  • Onderstal, A.M.
  • De Waegenaere, A.M.B.

    (Tilburg University, Center for Economic Research)

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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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2002-44.

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

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Web page: http://center.uvt.nl

Related research

Keywords: lobbying; auctions; game theory;

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References

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  1. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Laffont, Jean-Jacques & Robert, Jacques, 1996. "Optimal auction with financially constrained buyers," Economics Letters, Elsevier, vol. 52(2), pages 181-186, August.
  3. Onderstal, A.M., 2002. "Socially Optimal Mechanisms," Discussion Paper 2002-34, Tilburg University, Center for Economic Research.
  4. Baye, M.R. & Kovenock, D. & De Varies, C.G., 1990. "The All-Pay Auction With Complete Information," Papers 9051, Tilburg - Center for Economic Research.
  5. Vijay Krishna & John Morgan, 1994. "An Analysis of the War of Attrition and the All-Pay Auction," Game Theory and Information 9409002, EconWPA.
  6. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
  7. Peter Cramton, 1998. "The Efficiency of the FCC Spectrum Auctions," Papers of Peter Cramton 98jlefcc, University of Maryland, Department of Economics - Peter Cramton, revised 27 Jul 1998.
  8. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1992. "Rigging the Lobbying Process: An Application of the All- Pay Auction," Papers 9-92-2, Pennsylvania State - Department of Economics.
  9. McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences.
  10. Yeon-Koo Che & Ian Gale, 1998. "Caps on Political Lobbying," Microeconomics 9809003, EconWPA.
  11. Potters, J.J.M. & Winden, F. van, 1992. "Lobbying and asymmetric information," Open Access publications from Tilburg University urn:nbn:nl:ui:12-223989, Tilburg University.
  12. 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.
  13. 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.
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Citations

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Cited by:
  1. Matthias Dahm & Nicolás Porteiro, 2006. "Side Effects of Campaign Finance Reform," Working Papers 06.15, Universidad Pablo de Olavide, Department of Economics.
  2. Matthias Dahm & Nicolás Porteiro, 2006. "Informational Lobbying under the Shadow of Political Pressure," Working Papers 06.14, Universidad Pablo de Olavide, Department of Economics.
  3. Onderstal, A.M., 2002. "Socially Optimal Mechanisms," Discussion Paper 2002-34, Tilburg University, Center for Economic Research.

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