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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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
6992.
Length: Date of creation: 02 Feb 2008 Date of revision: Publication status: Published in Journal of Public Economics 3-4.92(2008): pp. 456-481 Handle: RePEc:pra:mprapa:6992
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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[Downloadable!] (restricted)
Other versions:
Gene M. Grossman & Elhanan Helpman, 1992.
"Protection For Sale,"
NBER Working Papers
4149, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Leonardo Felli & Antonio Merlo, 2001.
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PIER Working Paper Archive
04-043, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Oct 2004.
[Downloadable!]
Felli, L. & Merlo, A., 2000.
"Endogenous Lobbying,"
Working Papers
00-04, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!]
Leonardo Felli & Antonio Merlo, .
"Endogenous Lobbying,"
CARESS Working Papres
00-03, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
[Downloadable!]
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