Previous research has shown that if countries ”merge”, (i.e. move to centralized policy choices) the effect is to reduce lobbying. However empirical evidence suggests that this is not the case. This paper explains the empirical evidence in a two-jurisdiction political economy model of public good provision under policy centralization and policy decentralization, where the policy choice can be affected by the pressure of endogenously formed lobbies. We measure lobbying in three ways:(i) the number of lobbies formed under the two settings, (ii) their impact on policy decisions and (iii) the amount of resources transferred to the policy makers. We show that preference heterogeneity and lobby formation are positively related and that moving from decentralization to centralization can affect both the number and the type of lobbies. We develop some examples; among them: under centralization, compared to decentralization, the size of lobbies can be higher but the impact on policy can be smaller. Moreover we show how the majority groups try to offset lobbying by strategic voting for a candidate of a different group.
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Find related papers by JEL classification: H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
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.:
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!]
Other versions:
Leonardo Felli & Antonio Merlo, 2001.
"Endogenous Lobbying,"
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!]
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