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Ideological Uncertainty and Lobbying Competition

  • Martimort, David
  • Semenov, Aggey

Polarized interest groups (principals) compete to influence a decision-maker (agent) through monetary contributions. This decision-maker chooses a one-dimensional policy and has private information about his ideal point. Competition between interest groups under asymmetric information yields a rich pattern of equilibrium strategies and payoffs. Policies are systematically biased towards the decision-maker's ideal point and it may sometimes lead to a "laissez-faire" equilibrium. Either the most extreme decision-makers or the most moderate ones may get information rent depending on the importance of their ideological bias. The market for influence may exhibit segmentation with interest groups keeping an unchallenged influence on ideologically close-by decision-makers. Indeed, interest groups stop contributing when there is too much uncertainty on the decision-maker's ideology and when the latter is ideologically too far away.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6992.

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Date of creation: 02 Feb 2008
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Handle: RePEc:pra:mprapa:6992
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  1. David Martimort, 1992. "Multi-principaux avec anti-sélection," Annals of Economics and Statistics, GENES, issue 28, pages 1-37.
  2. Randall S. Kroszner & Thomas Stratmann, . "Interest Group Competition and the Organization of Congress: Theory and Evidence from Financial Services', Political Action Committees," CRSP working papers 465, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
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  4. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
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  6. LAUSSEL, Didier & LE BRETON, Michel, . "Conflict and cooperation. The structure of equilibrium payoffs in common agency," CORE Discussion Papers RP 1519, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Leonardo Felli & Antonio Merlo, . "Endogenous Lobbying," CARESS Working Papres 00-03, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  8. Gawande, Kishore & Krishna, Pravin & Olarreaga, Marcelo, 2009. "Lobbying competition over trade policy," CEPR Discussion Papers 7305, C.E.P.R. Discussion Papers.
  9. Maggi G. & Rodriguez-Clare A., 1995. "On Countervailing Incentives," Journal of Economic Theory, Elsevier, vol. 66(1), pages 238-263, June.
  10. Claudio Mezzetti, 1997. "Common Agency with Horizontally Differentiated Principals," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 323-345, Summer.
  11. Le Breton, Michel & Salanie, Francois, 2003. "Lobbying under political uncertainty," Journal of Public Economics, Elsevier, vol. 87(12), pages 2589-2610, December.
  12. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
  13. Helpman, E. & Persson, T., 1998. "Lobbying and Legislative Bargaining," Papers 08-98, Tel Aviv.
  14. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
  15. David Martimort & Lars Stole, 2001. "Contractual Externalities and Common Agency Equilibria," CESifo Working Paper Series 581, CESifo Group Munich.
  16. Martimort, David & Semenov, Aggey, 2007. "The pluralistic view of politics: Asymmetric lobbyists, ideological uncertainty and political entry," Economics Letters, Elsevier, vol. 97(2), pages 155-161, November.
  17. David Martimort & Aggey Semenov, 2007. "Political Biases in Lobbying under Asymmetric Information," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 614-623, 04-05.
  18. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
  19. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1437-1467.
  20. Gawande, Kishore, 1997. "US non-tariff barriers as privately provided public goods," Journal of Public Economics, Elsevier, vol. 64(1), pages 61-81, April.
  21. B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
  22. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-77, November.
  23. repec:ags:afjare:141665 is not listed on IDEAS
  24. David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July.
  25. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
  26. Martimort, David & Stole, Lars, 2009. "Selecting equilibria in common agency games," Journal of Economic Theory, Elsevier, vol. 144(2), pages 604-634, March.
  27. Bradford, Scott, 2003. "Protection and jobs: explaining the structure of trade barriers across industries," Journal of International Economics, Elsevier, vol. 61(1), pages 19-39, October.
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