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Pay-to-Play Politics: Informational lobbying and campaign finance reform when contributions buy access

Author

Listed:
  • Christopher Cotton

    (Department of Economics, University of Miami)

Abstract

We develop a game-theoretic model of lobbying in which contributions buy access to politicians. The analysis considers the claim that the rich are better off because they have more access to politicians, and that contribution limits reduce the rich-interest advantage, resulting in less-skewed policy. We show that these arguments do not hold when the politician is strategic in granting access. In equilibrium, rich interest groups receive greater access to the politician, but they are also the targets of politician rent seeking. Relatively poor groups tend to be better off in equilibrium. Contribution limits decrease the politician’s ability to extract rents from interest groups, which improves the payoffs of rich interests, and can result in worse policy. Finally, the paper provides a novel (and theoretically justified) argument in favor of contribution limits: they can encourage lobby formation, which results in more evidence disclosure and better policy.

Suggested Citation

  • Christopher Cotton, 2010. "Pay-to-Play Politics: Informational lobbying and campaign finance reform when contributions buy access," Working Papers 2010-22, University of Miami, Department of Economics.
    • Handle: RePEc:mia:wpaper:2010-22
    as

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    File URL: https://www.herbert.miami.edu/_assets/files/repec/wp-2010-22-pay-to-play-politics.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Christopher S. Cotton & Arnaud Déllis, 2016. "Informational Lobbying and Agenda Distortion," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(4), pages 762-793.
    2. Raphael Boleslavsky & Christopher Cotton, 2018. "Limited capacity in project selection: competition through evidence production," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 385-421, March.
    3. Christopher Cotton, 2013. "Competing for the Attention of Policymakers," Working Papers 2013-14, University of Miami, Department of Economics.
    4. Cheng Li & Christopher Cotton, 2016. "Clueless Politicians," Working Paper 1341, Economics Department, Queen's University.
    5. Christopher Cotton, 2015. "Competing For Attention," Working Paper 1344, Economics Department, Queen's University.
    6. Arnaud Dellis & Mandar Oak, 2016. "Overlobbying and Pareto-improving Agenda Constraint," School of Economics and Public Policy Working Papers 2016-05, University of Adelaide, School of Economics and Public Policy.

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    More about this item

    Keywords

    political contributions; contribution limits; access; verifiable information disclosure;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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