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Politician preferences and caps on political lobbying

Author

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  • Ivan Pastine
  • Tuvana Pastine

Abstract

This paper extends Che and Gale (1998) by allowing the incumbent politician to have a preference for the policy position of one of the lobbyists. The effect of a contribution cap is analyzed where two lobbyists contest for a political prize. The cap always helps the lobbyist whose policy position is preferred by the politician no matter whether it is the high-valuation or the low-valuation contestant. In contrast to Che and Gale, once the cap is binding a more restrictive cap always reduces expected aggregate contributions. However, the politician might support the legislation of a barely binding cap. When politician policy preferences perfectly reflect the will of the people, a more restrictive cap is always welfare increasing. When lobbyist’s valuations completely internalize all social costs and benefits, a cap is welfare improving if and only if the politician favors the high-value policy. Even a barely binding cap can have significant welfare consequences.

Suggested Citation

  • Ivan Pastine & Tuvana Pastine, 2006. "Politician preferences and caps on political lobbying," Working Papers 200619, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:200619
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    File URL: http://hdl.handle.net/10197/700
    File Function: First version, 2006
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    References listed on IDEAS

    as
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    3. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, pages 643-651.
    4. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993. "Rigging the Lobbying Process: An Application of the All-Pay Auction," American Economic Review, American Economic Association, pages 289-294.
    5. Drazen, Allan & Limao, Nuno & Stratmann, Thomas, 2007. "Political contribution caps and lobby formation: Theory and evidence," Journal of Public Economics, Elsevier, pages 723-754.
    6. Fang, Hanming, 2002. "Lottery versus All-Pay Auction Models of Lobbying," Public Choice, Springer, vol. 112(3-4), pages 351-371, September.
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    13. Corns, Allan & Schotter, Andrew, 1996. "Can Affirmative Action be Cost-Effective? An Experimental Examination of Price-Preference Auctions," Working Papers 96-02, C.V. Starr Center for Applied Economics, New York University.
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    More about this item

    Keywords

    All-pay auction; Campaign finance reform; Explicit ceiling; Political campaigns--Mathematical models; Campaign funds; Noncooperative games (Mathematics);

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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