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Ideological Uncertainty and Lobbying Competition

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Author Info
Martimort, David
Semenov, Aggey

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Abstract

Polarized interest groups (principals) compete to influence a decision-maker (agent) through monetary contributions. This decision-maker chooses a one-dimensional policy and has private information about his ideal point. Competition between interest groups under asymmetric information yields a rich pattern of equilibrium strategies and payoffs. Policies are systematically biased towards the decision-maker's ideal point and it may sometimes lead to a "laissez-faire" equilibrium. Either the most extreme decision-makers or the most moderate ones may get information rent depending on the importance of their ideological bias. The market for influence may exhibit segmentation with interest groups keeping an unchallenged influence on ideologically close-by decision-makers. Indeed, interest groups stop contributing when there is too much uncertainty on the decision-maker's ideology and when the latter is ideologically too far away.

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File URL: http://mpra.ub.uni-muenchen.de/8520/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6992.

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Date of creation: 02 Feb 2008
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Publication status: Published in Journal of Public Economics 3-4.92(2008): pp. 456-481
Handle: RePEc:pra:mprapa:6992

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Related research
Keywords: Lobbying Competition; Common Agency; Asymmetric Information; Contributions.;

Other versions of this item:

Find related papers by JEL classification:
D7 - Microeconomics - - Analysis of Collective Decision-Making
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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References listed on IDEAS
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    Other versions:
  2. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics And Politics Of The Relaxation Of Bank Branching Restrictions," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1437-1467, November. [Downloadable!] (restricted)
  3. David Martimort & Lars Stole, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 0(1). [Downloadable!]
  4. Bradford, Scott, 2003. "Protection and jobs: explaining the structure of trade barriers across industries," Journal of International Economics, Elsevier, vol. 61(1), pages 19-39, October. [Downloadable!] (restricted)
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  6. Claudio Mezzetti, 1997. "Common Agency with Horizontally Differentiated Principals," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 323-345, Summer. [Downloadable!] (restricted)
  7. Pinelopi Koujianou Goldberg & Giovanni Maggi, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December. [Downloadable!] (restricted)
    Other versions:
  8. Martimort, David & Semenov, Aggey, 2007. "The pluralistic view of politics: Asymmetric lobbyists, ideological uncertainty and political entry," Economics Letters, Elsevier, vol. 97(2), pages 155-161, November. [Downloadable!] (restricted)
  9. David Martimort & Aggey Semenov, 2007. "Political Biases in Lobbying under Asymmetric Information," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 614-623, 04-05. [Downloadable!] (restricted)
  10. Peters, Michael, 2001. "Common Agency and the Revelation Principle," Econometrica, Econometric Society, vol. 69(5), pages 1349-72, September.
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  11. David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July. [Downloadable!] (restricted)
  12. Leonardo Felli & Antonio Merlo, 2006. "Endogenous Lobbying," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 180-215, 03. [Downloadable!] (restricted)
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  13. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December. [Downloadable!] (restricted)
  14. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-77, November. [Downloadable!] (restricted)
  15. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December. [Downloadable!] (restricted)
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  18. Laussel, Didier & Le Breton, Michel, 2001. "Conflict and Cooperation: The Structure of Equilibrium Payoffs in Common Agency," Journal of Economic Theory, Elsevier, vol. 100(1), pages 93-128, September. [Downloadable!] (restricted)
  19. Gawande, Kishore, 1997. "US non-tariff barriers as privately provided public goods," Journal of Public Economics, Elsevier, vol. 64(1), pages 61-81, April. [Downloadable!] (restricted)
  20. Randall S. Kroszner & Thomas Stratmann, 1998. "Interest Group Competition and the Organization of Congress: Theory and Evidence from Financial Services' Political Action Committees," CRSP working papers 349, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
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  21. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July. [Downloadable!] (restricted)
  22. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February. [Downloadable!] (restricted)
  23. Martimort, David & Stole, Lars, 1999. "Contractual Externalities and Common Agency Equilibria," IDEI Working Papers 110, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003. [Downloadable!]
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