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Informational Lobbying and Political Contributions

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  • Morten Bennedsen

    (Copenhagen Business School)

  • Sven E. Feldmann

    (University of Chicago)

Abstract

Interest groups can influence political decisions in two distinct ways: by offering contributions to political actors and by providing them with relevant information that is favorable for the group. We analyze the conditions under which interest groups are more inclined to use one or the other channel of influence. First, we identity an indirect cost of searching for information in the form of an information externality that increases the cost of offering contributions. We then show that an extreme interest group might find it beneficial to abandon information provision altogether and instead seek influence solely via contributions. Finally, we apply our model to cast doubt on the "conventional wisdom" that competition among information providers increases the amount of information provided: when the identified information externality is taken into account, we show that competition decreases information search. Thus, our analysis lends support to a rather cynical view of lobbying wherein lobby groups provide little or no useful information to the political process.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 2000-02.

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Length: 32 pages
Date of creation: Jun 2000
Date of revision:
Handle: RePEc:kud:kuieci:2000-02

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  8. Bennedsen, Morten & Feldmann, Sven E., 2000. "Lobbying Legislatures," Working Papers 07-2000, Copenhagen Business School, Department of Economics.
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  14. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
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  16. Bennedsen, Morten & Feldmann, Sven E., 2002. "Lobbying and Legislative Organization The Effect of the Vote of Confidence Procedure," Working Papers 01-2002, Copenhagen Business School, Department of Economics.
  17. Laffont, Jean-Jacques & Tirole, Jean, 1990. "The Politics of Government Decision Making: Regulatory Institutions," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(1), pages 1-31, Spring.
  18. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-63, July.
  19. Lohmann, Susanne, 1995. " Information, Access, and Contributions: A Signaling Model of Lobbying," Public Choice, Springer, vol. 85(3-4), pages 267-84, December.
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