Microfoundations of pressure group competition

Abstract

The core of the model is the explicit microeconomic investigation of pressure group formation, activity, and interaction. At the first stage we envisage two groups consisting of those individuals who are willing to pay for an increase or a decrease, respectively, of some public good relative to the government proposal. Each of these groups play noncooperative lobby-formation game and forms, under certain conditions, a lobbying organization being financed out of uniform membership dues. At the second stage the competition among these lobbies is again modelled as a noncooperative game.