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Caps on Political Contributions, Monetary Penalties and Politician Preferences

  • Ivan Pastine

    (University College Dublin)

  • Tuvana Pastine

    (National University of Ireland, Maynooth)

With politician preferences over policy outcomes, the effect of a contribution cap with monetary penalties for exceeding the cap is starkly different from the case with an indifferent politician. In contrast to Kaplan and Wettstein (AER, 2006) and Gale and Che (AER, 2006), a cap is never neutral on the expected cost of contributions nor on the policy outcome. Furthermore more restrictive caps can lead to increased aggregate contributions. When the penalty for exceeding the cap is small enough that it is impossible to suppress all contributions, the influence of money on policy is minimized with a binding but non-zero cap and maximized with no cap.

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File URL: http://www.ucd.ie/t4cms/wp09.12.pdf
File Function: First version, 2009
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Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200912.

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Length: 28 pages
Date of creation: 07 Sep 2009
Date of revision:
Handle: RePEc:ucn:wpaper:200912
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  1. Steven D. Levitt, 1995. "Policy Watch: Congressional Campaign Finance Reform," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 183-193, Winter.
  2. Austen-Smith, David, 1998. "Allocating Access for Information and Contributions," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(2), pages 277-303, October.
  3. Tripathi Micky & Ansolabehere Stephen & Jr James M. Snyder, 2002. "Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act," Business and Politics, De Gruyter, vol. 4(2), pages 1-26, August.
  4. Ivan Pastine & Tuvana Pastine, 2008. "Politician Preferences,Law-Abiding Lobbyists and Caps on Political Lobbying," Economics, Finance and Accounting Department Working Paper Series n1991208.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  5. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1991. "Rigging The Lobbying Process: An Application Of The All- Pay Auction," Purdue University Economics Working Papers 1002, Purdue University, Department of Economics.
  6. 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.
  7. Konrad, Kai A., 2001. "Investment in the Absence of Property Rights: The Role of Incumbency Advantages," CEPR Discussion Papers 3050, C.E.P.R. Discussion Papers.
  8. Ivan Pastine & Tuvana Pastine, 2010. "Politician preferences, law-abiding lobbyists and caps on political contributions," Public Choice, Springer, vol. 145(1), pages 81-101, October.
  9. Ron Siegel, 2009. "All-Pay Contests," Econometrica, Econometric Society, vol. 77(1), pages 71-92, 01.
  10. Thomas Stratmann & Francisco J. & Aparicio-Castillo, 2006. "Competition policy for elections: Do campaign contribution limits matter?," Public Choice, Springer, vol. 127(1), pages 177-206, April.
  11. Yeon-Koo Che & Ian Gale, 2006. "Caps on Political Lobbying: Reply," Discussion Papers 0506-15, Columbia University, Department of Economics.
  12. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-51, June.
  13. Todd Kaplan, 2001. "All-Pay Auctions with Variable Rewards," Discussion Papers 0109, Exeter University, Department of Economics.
  14. repec:ags:afjare:141665 is not listed on IDEAS
  15. 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.
  16. 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.
  17. Thomas Stratmann, 2006. "Contribution limits and the effectiveness of campaign spending," Public Choice, Springer, vol. 129(3), pages 461-474, December.
  18. Todd R. Kaplan & David Wettstein, 2006. "Caps on Political Lobbying: Comment," American Economic Review, American Economic Association, vol. 96(4), pages 1351-1354, September.
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