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Informational Lobbying and Competition for Access

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Author Info
Cotton, Christopher

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Abstract

There is substantial evidence that political contributions buy access to politicians. This paper incorporates access into a model of informational lobbying, then uses the access framework to analyze the impact of contribution limits on policy outcomes and representative citizen welfare. In the competition for access model, interest groups provide contributions to a politician and those that provide the highest contributions win access. A group with access can present verifiable evidence in favor of its preferred policy. Because equilibrium contributions are chosen endogenously, the politician learns about the evidence quality of all interest groups, even when he grants access to only some of the groups. A contribution limit reduces the amount of information available to the politician and tends to result in worse policy. Under a variety of assumptions, a limit has an unambiguously negative impact on representative citizen welfare. However, when the politician can choose whether to sell access or sell policy favors, a contribution limit can improve citizen welfare by making it more likely that the politician sells access.

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1842.

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Date of creation: 25 Oct 2007
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Handle: RePEc:pra:mprapa:1842

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Related research
Keywords: All-pay auction; political access; lobbying; campaign contributions; contribution limits;

Other versions of this item:

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation

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References listed on IDEAS
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  1. 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.
    Other versions:
  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. [Downloadable!]
    Other versions:
  3. Jeffrey Milyo & David Primo & Timothy Groseclose, 2000. "Corporate PAC Campaign Contributions in Perspective," Business and Politics, Berkeley Electronic Press, vol. 2(1). [Downloadable!]
  4. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-63, July. [Downloadable!] (restricted)
  5. Prat, Andrea, 2002. "Campaign Advertising and Voter Welfare," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 999-1017, October.
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  6. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September. [Downloadable!] (restricted)
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  7. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June. [Downloadable!] (restricted)
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  8. Joan Esteban & Debraj Ray, 2006. "Inequality, Lobbying, and Resource Allocation," American Economic Review, American Economic Association, vol. 96(1), pages 257-279, March. [Downloadable!]
  9. 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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  10. 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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  11. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1999. " The Incidence of Overdissipation in Rent-Seeking Contests," Public Choice, Springer, vol. 99(3-4), pages 439-54, June. [Downloadable!] (restricted)
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  12. Morten Bennedsen & Sven E. Feldmann, 2002. "Lobbying Legislatures," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 919-948, August. [Downloadable!] (restricted)
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  13. 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.
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  14. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June. [Downloadable!]
  15. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring. [Downloadable!] (restricted)
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  16. Lohmann, Susanne, 1995. " Information, Access, and Contributions: A Signaling Model of Lobbying," Public Choice, Springer, vol. 85(3-4), pages 267-84, December.
  17. Simon P. Anderson & Jacob K. Goeree & Charles A. Holt, 1998. "Rent Seeking with Bounded Rationality: An Analysis of the All-Pay Auction," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 828-853, August. [Downloadable!] (restricted)
  18. Holt, Charles A, Jr & Sherman, Roger, 1982. "Waiting-Line Auctions," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 280-94, April. [Downloadable!] (restricted)
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