The Dynamics of Lobbying Under Uncertainty: On Political Liberalization in Arab Countries

We consider a framework à la Wirl (Public Choice 80:307–323, 1994) where political liberalization is the outcome of a lobbying differential game between a conservative elite and a reformist group, the former player pushing against political liberalization in opposition to the latter. In contrast to the benchmark model, we introduce uncertainty. We consider the typical case of an Arab resource-exporting country where oil rents are fiercely controlled by the conservative elite. We assume that the higher the oil rents, the more reluctant to political liberalization the elite is. Two states of nature are considered (high vs. low resource rents). We then compute the Markov-perfect equilibria of the corresponding piecewise deterministic differential game. It is shown that introducing uncertainty in this manner increases the set of strategies compared to Wirl’s original setting. In particular, the cost of lobbying might be significantly increased under uncertainty with respect to the benchmark. This highlights some specificities of the political liberalization in Arab countries and the associated risks.