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Deep Pockets, Extreme Preferences: Interest Groups and Campaign Finance Contributions

  • Thomas Bassetti
  • Filippo Pavesi

In electoral competitions, interest groups will be willing to finance politicians that require funding for campaign advertising, in exchange for policy favors. Our model predicts that interest groups with more extreme preferences will devote more resources to campaign financing. This occurs because lobbies demand policy favors that are costly to candidates since they reduce voter consent. Extreme interest groups must therefore adequately reward politicians by providing higher contributions, so that candidates may recover popularity through campaign advertising. Our unique data set on U.S. House elections provides empirical evidence that is consistent with these findings.

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Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 222.

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Length: 36 pages
Date of creation: Apr 2012
Date of revision: Apr 2012
Handle: RePEc:mib:wpaper:222
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  1. Thomas Stratmann, 2009. "How prices matter in politics: the returns to campaign advertising," Public Choice, Springer, vol. 140(3), pages 357-377, September.
  2. Snyder, James M, Jr, 1990. "Campaign Contributions as Investments: The U.S. House of Representatives, 1980-1986," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1195-1227, December.
  3. Bombardini, Matilde & Trebbi, Francesco, 2011. "Votes or money? Theory and evidence from the US Congress," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 587-611, August.
  4. Per Pettersson-Lidbom, 2001. "An Empirical Investigation of the Strategic Use of Debt," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 570-583, June.
  5. Andrea Prat, 2002. "Campaign Advertising and Voter Welfare," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 999-1017.
  6. Aragones, Enriqueta & Palfrey, Thomas R., 2002. "Mixed Equilibrium in a Downsian Model with a Favored Candidate," Journal of Economic Theory, Elsevier, vol. 103(1), pages 131-161, March.
  7. 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.
  8. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
  9. Marcos Chamon & Ethan Kaplan, 2013. "The Iceberg Theory of Campaign Contributions: Political Threats and Interest Group Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 1-31, February.
  10. Stratmann, Thomas, 2002. "Can Special Interests Buy Congressional Votes? Evidence from Financial Services Legislation," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 345-73, October.
  11. Potters, Jan & Sloof, Randolph & van Winden, Frans, 1997. "Campaign expenditures, contributions and direct endorsements: The strategic use of information and money to influence voter behavior," European Journal of Political Economy, Elsevier, vol. 13(1), pages 1-31, February.
  12. Filippo Gregorini & Filippo Pavesi, 2011. "Do Campaign Finance Policies Really Improve Voters' Welfare?," Working Papers 209, University of Milano-Bicocca, Department of Economics, revised Apr 2011.
  13. David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
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