IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v88y1998i3p643-51.html
   My bibliography  Save this article

Caps on Political Lobbying

Author

Listed:
  • Che, Yeon-Koo
  • Gale, Ian L

Abstract

The cost of political campaigns in the U.S. has risen substantially in recent years. For example, real spending on congressional election campaigns doubled between 1976 and 1992 (Steven D. Levitt [1995]). There are many reasons why increased campaign spending might be socially harmful. First, increased spending means increased fund-raising, which may keep politicians from their legislative duties.1 Second, a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes, on the shaping of legislation, or on the outcome of regulatory proceedings.2 That is, the socially preferred candidate or legislation may not prevail. Likewise, a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator's intervention.3 Third, a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector. A desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending, beginning with the passage of the Federal Election Campaign Act (FECA). Political Action Committees (PACs) can contribute at most $5,000 per election to a candidate, while individuals can contribute at most $1,000. (Restrictions have also been put on in- kind contributions, making it more difficult to circumvent these limits.)4 While direct restrictions on campaign spending have proven difficult to implement, recent initiatives aim to impose voluntary spending limits and stricter limits on contributions.5 Despite the existing legislation and the proposals to limit contributions, little is known about the impact of contribution limits on aggregate expenditures. While it is intuitively appealing that aggregate expenditures would drop, we challenge that intuition here. We study a lobbying game and show that a cap on individual lobbyists' expenditures may have the perverse effect of increasing aggregate expenditures and loweri
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-651, June.
  • Handle: RePEc:aea:aecrev:v:88:y:1998:i:3:p:643-51
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0002-8282%28199806%2988%3A3%3C643%3ACOPL%3E2.0.CO%3B2-Y&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993. "Rigging the Lobbying Process: An Application of the All-Pay Auction," American Economic Review, American Economic Association, vol. 83(1), pages 289-294, March.
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    4. Dan Kovenock & Michael R. Baye & Casper G. de Vries, 1996. "The all-pay auction with complete information (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 291-305.
    5. Austen-Smith, David, 1995. "Campaign Contributions and Access," American Political Science Review, Cambridge University Press, vol. 89(3), pages 566-581, September.
    6. Poole, Keith T & Romer, Thomas & Rosenthal, Howard, 1987. "The Revealed Preferences of Political Action Committees," American Economic Review, American Economic Association, vol. 77(2), pages 298-302, May.
    7. Hall, Richard L. & Wayman, Frank W., 1990. "Buying Time: Moneyed Interests and the Mobilization of Bias in Congressional Committees," American Political Science Review, Cambridge University Press, vol. 84(3), pages 797-820, September.
    8. Wright, John R., 1990. "Contributions, Lobbying, and Committee Voting in the U.S. House of Representatives," American Political Science Review, Cambridge University Press, vol. 84(2), pages 417-438, June.
    9. Helsley, Robert W. & O'Sullivan, Arthur, 1994. "Altruistic voting and campaign contributions," Journal of Public Economics, Elsevier, vol. 55(1), pages 107-119, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christopher Cotton, 2013. "Competing for the Attention of Policymakers," Working Papers 2013-14, University of Miami, Department of Economics.
    2. Cotton, Christopher, 2012. "Pay-to-play politics: Informational lobbying and contribution limits when money buys access," Journal of Public Economics, Elsevier, vol. 96(3), pages 369-386.
    3. Cotton, Christopher, 2015. "Competing for Attention," MPRA Paper 65715, University Library of Munich, Germany.
    4. Brown, Jeffrey R. & Huang, Jiekun, 2020. "All the president's friends: Political access and firm value," Journal of Financial Economics, Elsevier, vol. 138(2), pages 415-431.
    5. Subhasish M. Chowdhury & Patricia Esteve-González & Anwesha Mukherjee, 2020. "Heterogeneity, Leveling the Playing Field, and Affirmative Action in Contests," Economics Series Working Papers 915, University of Oxford, Department of Economics.
    6. Kirkegaard, René, 2013. "Incomplete information and rent dissipation in deterministic contests," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 261-266.
    7. Yizhaq Minchuk & Aner Sela, 2020. "Contests with insurance," Review of Economic Design, Springer;Society for Economic Design, vol. 24(1), pages 1-22, June.
    8. Cotton, Christopher, 2009. "Should we tax or cap political contributions? A lobbying model with policy favors and access," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 831-842, August.
    9. Bertoletti, Paolo, 2006. "On the reserve price in all-pay auctions with complete information and lobbying games," MPRA Paper 1083, University Library of Munich, Germany.
    10. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    11. Bos, Olivier, 2016. "Charity auctions for the happy few," Mathematical Social Sciences, Elsevier, vol. 79(C), pages 83-92.
    12. Zhuoqiong Chen, 2021. "All-pay auctions with private signals about opponents’ values," Review of Economic Design, Springer;Society for Economic Design, vol. 25(1), pages 33-64, June.
    13. Yizhaq Minchuk & Aner Sela, 0. "Contests with insurance," Review of Economic Design, Springer;Society for Economic Design, vol. 0, pages 1-22.
    14. Ian Gale & Mark Stegeman, 1994. "Exclusion in all-pay auctions," Working Papers (Old Series) 9401, Federal Reserve Bank of Cleveland.
    15. Rittwik Chatterjee, 2013. "A Brief Survey of the Theory of Auction," South Asian Journal of Macroeconomics and Public Finance, , vol. 2(2), pages 169-191, December.
    16. Sérgio O. Parreiras & Anna Rubinchik, 2020. "Ex ante heterogeneity in all-pay many-player auctions with Pareto distribution of costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 765-783, October.
    17. Todd R. Kaplan & Aner Sela, 2008. "Effective Political Contests," Working Papers 0804, Ben-Gurion University of the Negev, Department of Economics.
    18. Bertoletti, Paolo, 2016. "Reserve prices in all-pay auctions with complete information," Research in Economics, Elsevier, vol. 70(3), pages 446-453.
    19. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    20. Matthias Dahm & Nicolás Porteiro, 2008. "Informational lobbying under the shadow of political pressure," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(4), pages 531-559, May.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:88:y:1998:i:3:p:643-51. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.