Campaign finance regulation with competing interest groups
Regulatory caps on contributions to political campaigns are the cornerstones of campaign finance legislation in many established democracies, and their introduction is considered by most emerging ones. Are these regulations desirable? This paper studies contribution caps in a menu auction lobbying model with limited budgets and costly entry. In the absence of entry, contribution caps improve welfare by "leveling the political playing field". With entry, however, a competition effect and a bargaining effect may arise, resulting in inefficient entry and exit decisions. In particular, a cap may lead to worse policies than the status quo; and even if better policies are chosen, the resulting gain in welfare may be more than offset by the entry costs. Regulation can also lead to the simultaneous entry of competing groups, creating costly rent-seeking on issues previously unaffected by lobbying.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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, 2003.
STICERD - Theoretical Economics Paper Series
448, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- 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.
- Felli, L. & Merlo, A., 2000. "Endogenous Lobbying," Working Papers 00-04, C.V. Starr Center for Applied Economics, New York University.
- Leonardo Felli & Antonio Merlo, . "Endogenous Lobbying," CARESS Working Papres 00-03, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Leonardo Felli & Antonio M. Merlo, 2000. "Endogenous Lobbying," CESifo Working Paper Series 291, CESifo Group Munich.
- Felli, Leonardo & Merlo, Antonio, 2002. "Endogenous Lobbying," CEPR Discussion Papers 3174, C.E.P.R. Discussion Papers.
- Leonardo Felli & Antonio Merlo, 2003. "Endogenous lobbying," LSE Research Online Documents on Economics 3590, London School of Economics and Political Science, LSE Library.
- Prat, A., 1997.
"Campaign Advertising and Voter Welfare,"
1997-118, Tilburg University, Center for Economic Research.
- Yeon-Koo Che & Ian Gale, 1998.
"Caps on Political Lobbying,"
- Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
- Jean-Pierre Benoit & Vijay Krishna, 1998.
"Multiple-Object Auctions with Budget Constrained Bidders,"
Game Theory and Information
9805001, EconWPA, revised 26 Jul 1999.
- Jean-Pierre Benoît & Vijay Krishna, 2001. "Multiple-Object Auctions with Budget Constrained Bidders," Review of Economic Studies, Oxford University Press, vol. 68(1), pages 155-179.
- Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
- Georg Kirchsteiger & Andrea Prat, 2001.
"Inefficient equilibria in lobbying,"
ULB Institutional Repository
2013/5901, ULB -- Universite Libre de Bruxelles.
- Dixit, Avinash & Grossman, Gene M. & Helpman, Elhanan, 1997.
"Common Agency and Coordination: General Theory and Application to Government Policy Making,"
3450061, Harvard University Department of Economics.
- Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-69, August.
- Grossman, Gene M & Helpman, Elhanan, 1994.
"Protection for Sale,"
American Economic Review,
American Economic Association, vol. 84(4), pages 833-50, September.
- Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
- Thomas Stratmann & Francisco J. & Aparicio-Castillo, 2006. "Competition policy for elections: Do campaign contribution limits matter?," Public Choice, Springer, vol. 127(1), pages 177-206, April.
- Potters, Jan & Sloof, Randolph, 1996.
"Interest groups: A survey of empirical models that try to assess their influence,"
European Journal of Political Economy,
Elsevier, vol. 12(3), pages 403-442, November.
- Potters, J.J.M. & Sloof, R., 1996. "Interest groups : A survey of empirical models that try to assess their influence," Other publications TiSEM ff27d5d8-f584-4386-a1fc-5, Tilburg University, School of Economics and Management.
- Allan Drazen & Nuno Limão & Thomas Stratman, 2004.
"Political Contribution Caps and Lobby Formation: Theory and Evidence,"
NBER Working Papers
10928, National Bureau of Economic Research, Inc.
- Drazen, Allan & Limao, Nuno & Stratmann, Thomas, 2007. "Political contribution caps and lobby formation: Theory and evidence," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 723-754, April.
- Pinelopi Koujianou Goldberg & Giovanni Maggi, 1997.
"Protection for Sale: An Empirical Investigation,"
NBER Working Papers
5942, National Bureau of Economic Research, Inc.
- Rama, Martin & Tabellim, Guido, 1998.
"Lobbying by capital and labor over trade and labor market policies,"
European Economic Review,
Elsevier, vol. 42(7), pages 1295-1316, July.
- Martín Rama & Guido Tabellini, . "Lobbying by Capital and Labor over Trade and Labor Market Policies," Working Papers 94, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
- repec:ags:afjare:141665 is not listed on IDEAS
- 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.
- B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:93:y:2009:i:3-4:p:373-391. 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: (Zhang, Lei)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.