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Pay-to-play politics: Informational lobbying and contribution limits when money buys access

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  • Cotton, Christopher

Abstract

We develop a game theoretic model of informational lobbying between two interest groups and a politician, in which the politician can require political contributions in exchange for access. The analysis considers three claims: (1) the rich have better access to politicians than less-wealthy groups, (2) this access advantage makes the rich better off and skews policy in their favor, and (3) contribution limits can reduce the rich group advantage and result in less-skewed policy. We show that the rich do have better access, with the politician always offering access to the rich groups and only sometimes offering access to the less-wealthy group. This does not, however, mean that the rich group is better off or that policy is biased in its favor. The politician sets access fees to extract the greatest amount of rent from the political process. When only the rich group has access, its expected benefit from gaining access is fully offset by its payment to the politician. In this case, the less-wealthy interest group who is not targeted by the politician is better off. Contribution limits decrease the politician's ability to extract rent, which improves the payoffs of rich interests and decreases politician payoffs. Finally, the paper presents a novel benefit of contribution limits: they can encourage the formation of lobby groups or the search for evidence, which results in more evidence disclosure and better policy.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:pubeco:v:96:y:2012:i:3:p:369-386
    DOI: 10.1016/j.jpubeco.2011.11.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Eric Avis & Claudio Ferraz & Frederico Finan & Carlos Varjão, "undated". "Money and Politics: The Effects of Campaign Spending Limits on Political Competition and Incumbency Advantage," Textos para discussão 656, Department of Economics PUC-Rio (Brazil).
    2. Martin Gregor, 2016. "Tullock's Puzzle in Pay-and-Play Lobbying," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 368-389, November.
    3. Gregor Martin, 2015. "To Invite or Not to Invite a Lobby, That Is the Question," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 143-166, July.
    4. Schneider, Maik T., 2014. "Interest-group size and legislative lobbying," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 29-41.
    5. Battaglini, Marco & Patacchini, Eleonora, 2016. "Influencing Connected Legislators," CEPR Discussion Papers 11571, C.E.P.R. Discussion Papers.
    6. repec:bla:ecinqu:v:55:y:2017:i:4:p:1868-1897 is not listed on IDEAS
    7. Petrova, Maria & Sen, Ananya & Yildirim, Pinar, 2017. "Social Media and Political Donations: New Technology and Incumbency Advantage in the United States," CEPR Discussion Papers 11808, C.E.P.R. Discussion Papers.
    8. Zudenkova Galina, 2017. "Lobbying as a Guard against Extremism," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(1), pages 1-17, February.
    9. Martin Gregor, 2014. "Receiver's access fee for a single sender," Working Papers IES 2014/17, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2014.
    10. Martin Gregor, 2014. "Access fees for competing lobbies," Working Papers IES 2014/22, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2014.
    11. Thomas Groll & Christopher J. Ellis, 2017. "Repeated Lobbying By Commercial Lobbyists And Special Interests," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1868-1897, October.
    12. Wolton, Stephane, 2016. "Lobbying, Inside and Out: How Special Interest Groups Influence Policy Choices," MPRA Paper 68637, University Library of Munich, Germany.
    13. Boleslavsky, Raphael & Lewis, Tracy R., 2016. "Evolving influence: Mitigating extreme conflicts of interest in advisory relationships," Games and Economic Behavior, Elsevier, vol. 98(C), pages 110-134.

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