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The Political Economy of Interest Groups: Pressure and Information

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  • Nicolas Porteiro
  • Matthias Dahm

Abstract

We examine the incentives of an interest group to provide a political decision-maker with policy-relevant information and to exert pressure on her. Both activities are costly but may induce the lobby's preferred policy. Our paper provides an integrated analysis of both lobbying activities and leads to interesting insights into the behavior of the interest group. Moreover, we show how conclusions of models that take into account only one of these activities may change. Our main results say that the relationship between the pressure exerted and the amount of information transmitted is not monotonic, and that an increase in the amount of information that the lobby transmits may be socially harmful. This analysis has immediate implications for the current discussions in the United States and Europe concerning the reform of their respective rules of party and candidate financing

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 352.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:352

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Keywords: party and candidate financing; lobbying; experts;

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References

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  1. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  2. James M. Snyder, 1991. "On Buying Legislatures," Economics and Politics, Wiley Blackwell, vol. 3(2), pages 93-109, 07.
  3. Austen-Smith, David, 1998. "Allocating Access for Information and Contributions," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(2), pages 277-303, October.
  4. Philippe Aghion & Jean Tirole, 1994. "Normal and Real Authority in Organizations," Working papers 94-13, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Morten Bennedsen & Sven E. Feldmann, 2000. "Lobbying Legislatures," CIE Discussion Papers 2000-04, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  6. Sloof, Randolph & van Winden, Frans, 2000. " Show Them Your Teeth First! A Game-Theoretic Analysis of Lobbying and Pressure," Public Choice, Springer, vol. 104(1-2), pages 81-120, July.
  7. Grossman, Gene & Helpman, Elhanan, 1996. "Competing for Endorsements," CEPR Discussion Papers 1546, C.E.P.R. Discussion Papers.
  8. Laffont, Jean-Jacques, 1999. "Political economy, information and incentives1," European Economic Review, Elsevier, vol. 43(4-6), pages 649-669, April.
  9. 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.
  10. Lohmann, Susanne, 1995. " Information, Access, and Contributions: A Signaling Model of Lobbying," Public Choice, Springer, vol. 85(3-4), pages 267-84, December.
  11. Michael J. Mandel, 1999. "Going for the Gold: Economists as Expert Witnesses," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 113-120, Spring.
  12. Prat, Andrea, 2002. "Campaign Spending with Office-Seeking Politicians, Rational Voters, and Multiple Lobbies," Journal of Economic Theory, Elsevier, vol. 103(1), pages 162-189, March.
  13. Randolph Sloof & Frans van Winden, 2000. "Show Them Your Teeth First!," Public Choice, Springer, vol. 104(1), pages 81-120, July.
  14. Laffont, J.-J., 1999. "Political Economy, Information and Incentives," Papers 99.516, Toulouse - GREMAQ.
  15. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743.
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Cited by:
  1. Javier A. Prado Domínguez & Antonio García Lorenzo, 2010. "Competencia e incentivos a la cooperación en la interacción de grupos de interés que pretenden aumentar su influencia política directa: ¿cuál es la importancia de la presión política?," Hacienda Pública Española, IEF, vol. 192(1), pages 105-125, March.
  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.

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