LOBBYING CONTESTS WITH ENDOGENOUS POLICY PROPOSALS

Author: MÜNSTER, JOHANNES

Source: Economics and Politics, Volume 18, Number 3, November 2006 , pp. 389-397(9)

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Abstract:

Lobbyists choose what to lobby for. If they can precommit to certain policy proposals, their choice will have an influence on the behavior of opposing lobbyists. Hence lobbyists have an incentive to moderate their policy proposals in order to reduce the intensity of the lobbying contest. This logic has been explored in a number of recent papers. I reconsider the topic with a perfectly discriminating contest. With endogenous policy proposals, there is a subgame-perfect equilibrium where the proposals of the lobbyists coincide and maximize joint welfare; moreover, this equilibrium is the only one that survives repeated elimination of dominated strategies. Hence there is no rent dissipation at all. A politician trying to maximize lobbying expenditures would prefer an imperfectly discriminating contest.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1468-0343.2006.00175.x

Affiliations: 1: Free University of Berlin and Social Science Research Center Berlin (WZB)

Publication date: 2006-11-01