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A Simple Model of the Commercial Lobbying Industry

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  • Groll, Thomas
  • Ellis, Christopher J.

Abstract

In this paper we present a model of the behavior of commercial lobbying firms (such as the so-called K-Street lobbyists of Washington, D.C.). In contrast to classical special interest groups, commercial lobbying firms represent a variety of clients and are not directly affected by policy outcomes. They are hired by citizens, or groups of citizens, to advocate on their behalf to policymakers. In our analysis we address two basic questions; why do commercial lobbying firms exist, and what are the implications of their existence for social welfare? We answer the first part of this question by proposing that commercial lobbying firms possess a verification technology that allows them to improve the quality of information concerning the social desirability of policy proposals. This gives policymakers the incentive to allocate their scarce time to lobbying firms. Essentially it is this access to policymakers that lobbying firms sell to their clients. To address the question of social welfare we construct a simple general equilibrium model that includes commercial lobbying firms, and compare the equilibrium obtained under market provision of lobbying services to the first best optimum. We find that the market level of lobbying services can be socially either too large or too small, and characterize when each will be the case.

Suggested Citation

  • Groll, Thomas & Ellis, Christopher J., 2012. "A Simple Model of the Commercial Lobbying Industry," MPRA Paper 36168, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36168
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    References listed on IDEAS

    as
    1. Groll, Thomas & Ellis, Christopher J., 2014. "A simple model of the commercial lobbying industry," European Economic Review, Elsevier, vol. 70(C), pages 299-316.
    2. Patrick Bolton & Mathias Dewatripont, 2005. "Contract Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025760.
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    10. Cotton, Christopher, 2009. "Should we tax or cap political contributions? A lobbying model with policy favors and access," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 831-842, August.
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    21. Thomas Groll & Christopher J. Ellis, 2013. "Dynamic Commercial Lobbying," CESifo Working Paper Series 4114, CESifo Group Munich.
    22. Marianne Bertrand & Matilde Bombardini & Francesco Trebbi, 2014. "Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process," American Economic Review, American Economic Association, vol. 104(12), pages 3885-3920, December.
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    Citations

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    Cited by:

    1. Groll, Thomas & Ellis, Christopher J., 2014. "A simple model of the commercial lobbying industry," European Economic Review, Elsevier, vol. 70(C), pages 299-316.
    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. repec:bla:ecinqu:v:55:y:2017:i:4:p:1868-1897 is not listed on IDEAS
    4. Thomas Groll & Christopher J. Ellis, 2013. "Dynamic Commercial Lobbying," CESifo Working Paper Series 4114, CESifo Group Munich.
    5. 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.
    6. 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.

    More about this item

    Keywords

    Lobbying; Influence Activities; Information Acquisition; Financial Contributions; Commercial Lobbying Firms; Political Participation;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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