Model Of Lobbying Research Articles

Entrepreneurial Innovations, Entrepreneurship Policy and Globalization

What explains the world-wide trend of pro-entrepreneurial policies? We study entrepreneurial policy in a lobbying model taking into account the conflict of interest between entrepreneurs and incumbents. It is shown that international market integration leads to more pro-entrepreneurial policies. It is then more difficult to protect the profits of incumbents from entrepreneurial entry and pro-entrepreneurial policies make foreign entrepreneurs less aggressive. Using the World Bank Doing Business database, we find evidence that international openness reduces barriers to entry for new entrepreneurs and that the effect is stronger in countries with more rent-seeking governments.

Institutional constraints on legislative lobbying: The case of Indian casino advocacy in New York

Prevailing theory holds that lobbyists primarily lobby their legislative allies, yet the literatures on advocacy and legislative organization suggest that we should not always expect this to be true. Institution design gives some legislators disproportionately greater power, and jurisdictional requirements often create a contentious environment forcing lobbyists to lobby their ideological opponents. Drawing on these literatures, I revise the basic lobbying model to predict conditions where we might expect to see advocates lobby their foes. I test my hypotheses with data on campaign contributions made in New York on the contentious issue of American Indian gambling casinos. I find that while advocates often lobbied their allies, they were more likely to contribute heavily to legislative leaders regardless of position, and often even contributed to rank-and-file opponents as the environment became more competitive. I also find some evidence that this was different for Indian nations, who may have employed a more naïve advocacy strategy than more traditional interest groups.

Congressional and Presidential Effects on the Demand for Lobbying

The authors show that the number of lobbyists active in a given issue area is driven not only by social mobilizations and economic trends but also by government activity. The effect of government spending is smaller than that of congressional interest as reflected in the number of hearings. Much lobbying is in response to regulations, not budgets. The authors augment their analysis by considering indicators of presidential activities. In areas where the president is traditionally active, presidential activity is shown to divert lobbying away from Congress, reducing overall lobbying levels. The authors find strong support for the congressional demand model of lobbying.

Sequential Legislative Lobbying under Political Certainty

In this paper, we analyse the equilibrium of a sequential game-theoretical model of lobbying, based on Groseclose and Snyder (1996), describing a legislature that votes on two alternatives and two opposing lobbies, lobby 0 and lobby 1, that compete by bidding for legislators’votes. In this model there is a strong second-mover advantage,

Governmental behavior in representative democracy: a synthesis of the theoretical literature

What is the impact of bureaucratic behaviors on tax rates? What is preferable: a bureaucrat or a partisan politician? Does a flypaper effect occur when lobby groups influence public policies? This article tries to answer these questions by analyzing and comparing six different models of public choice: (1) the median voter model, (2) the Leviathan model, (3) the slack-maximizing model, (4) a general model of bureaucracy, (5) the partisan politicians model and (6) a general model of lobbying. Among several results, it is shown that the median voter’s income and tax share almost always play a significant role in the design of the public good/tax package, even if the government does not explicitly try to maximize the median voter’s utility. The article also provides a synthesis of the positive analysis of the flypaper effect.

Explaining agricultural distortion patterns : the roles of ideology, inequality, lobbying, and public finance

In this paper, the authors examine the political economy drivers of the variation in agricultural protection, both across countries and within countries over time. The paper starts by listing the key insights provided by both the theoretical and empirical literature on the political economy of trade policy formulation. The authors then set out a basic framework that allows us to put forth various testable hypotheses on the variation and evolution of agricultural protection. The authors find that both the political ideology of the government and the degree of income inequality are important determinants of agricultural protection. Thus, both the political-support-function approach as well as the median-voter approach can be used in explaining the variation in agricultural protection across countries and within countries over time. The results are consistent with the predictions of a model that assumes that labor is specialized and sector-specific in nature. Some aspects of protection also seem to be consistent with predictions of a lobbying model in that agricultural protection is negatively related to agricultural employment and positively related to agricultural productivity. Public finance aspects of protection also seem to be empirically important.

Should we tax or cap political contributions? A lobbying model with policy favors and access

This paper develops a model of political contributions in which a politician can either sell policy favors, or sell access. Access allows interest groups to share hard information with the politician in support of their preferred policy. Here selling access maximizes policy utility, while selling policy favors maximizes total contributions. Imposing a binding contribution limit makes it more likely that the politician sells access, which can improve expected constituent welfare. However, a contribution limit distorts the signals associated with the contributions, which tends to result in worse policy. Alternatively, a tax on political contributions can ensure that the politician sells access without distorting his information. Therefore, from the viewpoint of a representative constituent, a tax on contributions is strictly preferred to a contribution limit or no reform. The politician, however, may prefer regulation in the form of a contribution limit, even when a tax is better for the constituent.

The informational effects of competition and collusion in legislative politics

We use a mechanism design approach to study the organization of interest groups in an informational model of lobbying. Interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers. Interest groups have private information on their ideal points in a one-dimensional policy space and may either compete or adopt more collusive behaviors. Optimal policies result from a trade-off between imposing rules which are non-responsive to the groups' preferences and flexibility that pleases groups better. Within a strong coalition, interest groups credibly share information which facilitates communication of their joint interests, helps screening by the legislature and induces flexible policies responsive to the groups' joint interests (an informativeness effect). Competing interest groups better transmit information on their individual preferences (a screening effect). The socially and privately optimal organization of lobbying favors competition between groups only when their preferences are not too congruent with those of the legislature. With more congruence, a strong coalition is preferred. Finally, within a weak coalition, interest groups must design incentive compatible collusive mechanisms to share information. Such weak coalitions are always inefficient.

Lobbying with conflicting interests: Norwegian local‐central relations

Abstract. The costly lobbying model of Potters and van Winden is confronted with data on lobbying interactions between local assemblies and the national assembly in Norway. A total of 239 interactions are studied. Survey responses by a large number of voters and politicians, as well as registry data on fiscal standing, demographics and elections are utilised. Two of the main predictions of the costly lobbying model gain support in the data. The probability of obtaining substantial discretionary funding from the central level increases: with decreasing conflict of interest between local and central politicians; and with the lobbying cost incurred by local politicians. For a given conflict and cost, however, the rate of lobbying success depends crucially on structural characteristics of the municipality. In particular, the success rate is significantly higher for poor municipalities located in national electoral districts with many seats per voter than for rich municipalities located in districts with few seats per voter.

Strategic Lobbying

Do interest groups strategically select lobbying tactics in response to the legislative context of policies they wish to influence? As rational actors, interest groups should be keen to spend their resources wisely by responding strategically to legislative contexts. This research suggests a theoretical and empirical framework and attempts to explain variations in interest group behavior at the policy level. The empirical design associates direct and indirect interest group lobbying activities with specific policies and tests the hypothesis that interest groups use legislative context as a part of their decision calculus when considering how to lobby Congress. I find that measures of legislative context are important components of models of direct and indirect lobbying.

On the gains of committing to inefficiency: Corruption, deforestation and low land productivity in Latin America

We present a new explanation and empirical evidence showing that rural subsidies to large farmers tend to be associated with low land productivity and excessive deforestation. We develop a lobbying model where wealthy farmers trade bribes or political contributions to government politicians in exchange for subsidies; farmers are able to tilt the terms of the bargaining game with policy makers in their favor by pre-committing to an inefficient choice of semi-fixed inputs. Government proneness to accept political contributions or bribes and its willingness to provide subsidies cause farmers to adopt inefficient modes of production as a mechanism to capture such subsidies. Our predictions are consistent with stylized facts on land use in Latin America, and suggest that subsidy schemes have been counterproductive—distorting and constraining development, and triggering excessive depletion of natural resources. We validate some of the predictions of the model through econometric analyses using a new data set for nine countries in Latin America.

Political Biases in Lobbying under Asymmetric Information

This paper introduces asymmetric information in a pluralistic model of interest groups competition and analyzes its impact on policy biases. Lobbying groups are uninformed on a decision maker’s preferences and use nonlinear contributions not only to compete for the agent’s services but also to learn about his preferences in an otherwise standard common agency model of lobbying. Asymmetric information can be either on the decision maker’s ideal point (horizontal differentiation) or on the strength of his own preferences for ideology (vertical differentiation). At equilibrium, asymmetric information redistributes bargaining powers between interest groups and the decision maker in non-trivial ways that may depend on the kind of informational asymmetry which is postulated. Asymmetric information tends to mitigate the influence of interest groups and contributions might be significantly reduced. Interest groups no longer contribute for a change in policy what it is worth to them as under complete information. Contributions incorporate a discount related to the group’s ability to solve the asymmetric information problem. (JEL: D72, D82)

Lobbying activity and fora creation in the EU: empirically exploring the nature of the policy good

This paper presents a quantitative look at lobbying activity and the emergence of institutional fora in the European Union (EU). Specifically, the paper explores why the number of interest representatives differs across policy domains, and why we find institutionalized fora for interest representation for some policy issues but not others. Building on a strategic lobbying model, the paper shows empirically that Commission activity influences interest group activity, and that increased activity leads to the creation of fora. This conforms to our assertion that the creation of lobbying insiders is a reaction to lobbying overload. We also find that distributive policy domains have fewer lobbying groups than regulatory policy domains. This is unsurprising, considering that regulation is the area of greatest EU policy output. Conversely, lower levels of lobbying activity in distributive policy domains indicate that these are still highly intergovernmental and encourage multi-level venue shopping.

Competitive Lobbying and Supermajorities in a Majority‐rule Institution

AbstractThis paper presents a complete information model of competitive lobbying in a majority‐rule institution where lobbying consists of providing politically‐valuable resources to legislators. Legislators have three roles. First, they act as allies or opponents in deciding whether to consider a lobbyist's offer. Second, they act as agenda‐setters in deciding whether to bring a policy alternative to a vote. Third, they vote on the agenda. The stationary equilibria include minimal majorities and supermajorities and involve unilateral, counteractive and preemptive lobbying. Supermajorities are recruited either to influence agenda formation or to preempt the opposing lobbyist.

Dynamic Lobbying Conflicts

This paper analyzes a dynamic lobbying model in which two antagonistic lobbies compete with each other for a prize over two time periods that are linked through status quo bias. The attacker has to decide whether to attempt an attack on the status quo already in the first period or whether to wait. We identify how the attacker’s behavior in the dynamic model differs from that in a comparable static model. Two antagonistic effects are the “option value effect” that is similar to the real option effect in the theory of investment decisions under uncertainty; and a “defender discouragement effect” that often makes change cheaper to achieve than in a comparable static model.

Dynamic Lobbying Conflicts

This paper analyzes a dynamic lobbying model in which two antagonistic lobbies compete with each other for a prize over two time periods that are linked through status quo bias. The attacker has to decide whether to attempt an attack on the status quo already in the first period or whether to wait. This decision is similar to investment decisions under uncertainty. We find that the attack threshold is lower than in a comparable one period game, and that the expenditure level necessary to change the status quo is lower; this provides a possible solution for Tullock's rent seeking paradox in lobbying.

The Consequences of Collective Action: An Incomplete-Contracts Approach

Public policy may be determined as much by what cannot be agreed to by politicians and organized interests as by what can. Focusing on the inability of organized groups to credibly promise that their members will fully report revenues to tax authorities, I develop an incomplete-contracts lobbying model which shows that the provision of collective goods may be influenced by the anticipated tax compliance of economic sectors as well as by the organization of interests. Data from a survey of firms in Eastern Europe and the former Soviet Union are broadly supportive of the theory: the ability of firms to hide revenues from tax authorities rivals conventional collective-action variables in explaining variation in collective-goods provision, but only in that part of the postcommunist world where differences in revenue hiding across sectors are especially large.

Structural Power and Public Policy: A Signaling Model of Business Lobbying in Democratic Capitalism

This paper develops a signaling model of corporate lobbying in democratic capitalist societies to analyze the conditions that lead to a powerful political position of business. Proceeding from the traditional dichotomy of structural economic determinants versus business' political action, our model predicts the conditions under which elected political decisionmakers modify their policy pledges to accommodate business' political preferences, or override business' lobbying messages and honor their pledges. Our results show that the structural power of business over public policy is contingent on two variables: the size of reputation costs of business in relation to its material costs of lobbying; and the ratio of the policymaker's reputation constraints from policy commitments and campaign pledges to the electoral costs arising from adverse effects of policy. We evaluate our model using case studies of business lobbying on environmental and financial services regulation in Britain and Germany.

The Logic of Two-Level Games with Endogenous Lobbying: Case of International Environmental Agreements

International environmental agreements (IEAs) are increasingly important in a globalized economy. The aim of our paper is study the effect of political pressure groups-lobbies- on the size and stability of IEAs. To this purpose we use the framework of two-level games to explain how national political situation influences the decisions of governments at the international negotiations arena. we present an endogenous lobbying model in which we assume that lobbies try to influence the policy choice of governments by offering political contribution in return for policy compromise. Indeed, we use the “interest based explanation” of international environmental policy to describe the incentives of countries to join an agreement. This approach classifies countries in four categories: pushers, bystanders, intermediate and draggers. We found that, when government gives the same weight to contribution and to social welfare, the contributions from the industrial lobby give incentives to government (Pushers, intermediate) to participate in the grand coalition making it stable. Our results suggest that in order to sustain the grand coalition, weak global environmental agreements — i.e. those involving small abatement targets–should be negotiated. The result is similar if governments are more interested by political contribution. However, if governments care less about political contribution than about social welfare, industrial contribution is not enough to limit the free riding incentives of each type of government. In this situation, pushers are the more expected to sustain a small stable coalition.

How Special Interests Shape Policy - A Survey

This paper surveys recent approaches towards lobbying if interest groups influence the decision of an incumbent government. It describes the two main channels of influence which mainly exist in parallel, namely contribution payments and the transmission of information through lobbying. Recent extensions to the two basic lobbying models are discussed in great detail. Thereafter follows a short overview over current research, which tries to consolidate the two distinct branches of literature into a general lobbying model. The survey concludes with a summary of the main insights and indicates promising directions of further research.