Targeting the lobbying effort: The importance of local government lobbying

Abstract Local government is subject to extensive lobbying, which is reasonable given the greater importance of the local public sector in large welfare states. Most of the scholarly attention has been focused on lobbying at the national level, often addressing the impact of interest groups on public policies. This article discusses a decision–making model where interest groups optimize their lobbying efforts given the way that different local governments and individual politicians respond to these activities. A number of propositions are tested on the basis of data from Norwegian local government. Contrary to prior theorizing, we do not find that representatives seeking re–election are contacted more frequently by interest groups. Interest groups target their lobbying activities toward politicians who are members of the relevant council committees, and they exert stronger pressure on members of the executive board and active representatives who perceive themselves as influential. Inter–municipal differences are also of importance: The lobbying activities are more intensive where electoral participation is low and in the larger urban municipalities, while the size of legislatures and the strength of the local political leadership affect lobbying efforts negatively. Interest groups tend to be more active in the richer local governments. The demands of the residential population impact weakly on lobbying efforts.     

Targeting the lobbying effort: The importance of local government lobbying

Local government is subject to extensive lobbying, which is reasonable given the greater importance of the local public sector in large welfare states. Most of the scholarly attention has been focused on lobbying at the national level, often addressing the impact of interest groups on public policies. This article discusses a decision–making model where interest groups optimize their lobbying efforts given the way that different local governments and individual politicians respond to these activities. A number of propositions are tested on the basis of data from Norwegian local government. Contrary to prior theorizing, we do not find that representatives seeking re–election are contacted more frequently by interest groups. Interest groups target their lobbying activities toward politicians who are members of the relevant council committees, and they exert stronger pressure on members of the executive board and active representatives who perceive themselves as influential. Inter–municipal differences are also of importance: The lobbying activities are more intensive where electoral participation is low and in the larger urban municipalities, while the size of legislatures and the strength of the local political leadership affect lobbying efforts negatively. Interest groups tend to be more active in the richer local governments. The demands of the residential population impact weakly on lobbying efforts.     

Improper Selection of High-Cost Producers in the Rent-Seeking Contest

The resources two rival businesses spend to raise their own chanceof getting a unique monopoly license are a cost of rent-seeking.When those businesses differ in the costs of producing themonopoly good there is an additional cost of rent-seeking that hasnot been sufficiently studied in the literature. If the high cost producer winsthe license, the difference between his cost and the costs of hismore efficient rival is a social loss from improper selection ofproducers by the political process. The loss becomes more severewhen the ability to lobby of the inefficient producer outstripsthat of the efficient producer. This may help to explain whyspecialized lobbying evolved. Specialized lobbying reduces thesocial cost from improper selection of firms by allowing efficientproducers to hire expert rent-seekers and so to raise theirchances of gaining monopoly concessions.     

Market Structure,Tariff Lobbying and the Free-Rider Problem

The effect of changes in industry structure on the ability tomaintain a cooperative level of tariff lobbying are analyzed in arepeated game setting in which a simple trigger strategy is theenforcement mechanism. The difficulty of maintaining cooperation isidentified with the minimum discount factor necessary for themaintenance of cooperation. Factors which increase this criticalvalue of the discount parameter are said to make cooperation moredifficult. Some changes in industry structure which reduce measuredconcentration have ambiguous effects, while others may makecooperation among a given group of firms more likely.     

Cooperative lobbying and endogenous trade policy

This paper considers trade policies in a small open economy in which two influential interest groups lobby the government. Since competitive lobbying leads to excessive rent-seeking expenditures, the lobbies have an incentive to cooperate. The outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups. Two important results are derived. First, if the power of competing interest groups is balanced, then cooperation leads to free trade. Second, if it is unbalanced, cooperation may, on the contrary, increase protection.     

Public goods, group size, and the degree of rivalry

It is well established that the provision of a pure public good is increasing in group size if the good is normal. What I show is that if the good exhibits even a small degree of rivalry, then the individual level of consumption of the public good falls to zero in a large group. Thus, a strong version of Olson’s large group hypothesis applies to anything other than a pure public good. While individual consumption of the public good goes to zero in a large group, there is not a monotonicity result. If it is initially small, an increase in the group size may lead to an increase in the individual consumption of the public good.     

Public affairs practice and lobbying inequality: Reform and regulation of the influence game

Although vigorous lobbying by groups within society is essential for the functioning of democracy, it is widely perceived that resource‐rich groups, particularly corporations, enjoy unfair advantages and influence. This perception damages public trust in the efficacy of civic participation and the legitimacy of policymaking. This problem intermittently leads reformers and scholars to assess and develop policies that might assist in addressing lobbying power imbalances. This paper takes up Moloney's call for exploring ways of intervening in the communicative economy to directly address the problem of lobbying inequality. It considers the extent of lobbying inequalities and theoretical frameworks for understanding how resources enable an influence advantage, before assessing the types of regulatory approaches that have been used by democratic institutions. Voluntary measures that could be taken by the corporate sector and professional associations are considered, alongside the current interest in using digital platforms to identify inequalities and incorporate public preferences as a variable in allocating lobbying resources.     

Deregulation and Participation: An International Survey of Participation in Electricity Regulation

Amidst the wave of privatization and "deregulation" across the globe, a new set of regulatory structures is being created. The fact that deregulation actually involves "re-regulation" has been acknowledged in the recent literature, but the tension between regulation and public participation has been understudied in these new structures. While some private markets need effective regulation to reduce transactions costs and ensure stable market rules, consumers need regulation that is responsive to, and protective of, their interests. Consumer participation, therefore, is an important component of effective regulation. Effective regulation must also consider collective national or public interests, including the well-being of corporations. Therefore, regulatory agencies need to be both independent from, and responsive to corporate, consumer, and public interests. This article will briefly examine the tension among the competing goals of regulatory independence and responsiveness, and then conduct a broad survey of the status quo of public participation in national regulatory structures for electricity in the Americas. Our case studies demonstrate a wide variety of institutional mechanisms for participation, yet we find that no existing system seems to embrace direct participation by a wide set of consumers. The problems are even more acute in developing countries. We conclude by looking at recent experiments and proposals to improve the levels of participation in regulatory decision making.     

Exogenous tariff changes with an endogenous lobbying response

As pointed out by Krueger (1993a, 1993b), changes in policy which are exogenous to the lobbying process may lead to a vicious circle of protectionism. A sector which receives protection will tend to grow, thereby increasing the constituency for greater protection and reducing the constituency which opposes protection. The possibility of such a vicious circle is examined in the context of a trade model where capital, which is immobile in the short run, may lobby for a sector specific import tariff. If costs associated with overcoming the free rider problem do not rise too quickly, exogenous policy changes will be reinforced by the endogenous lobbying response, as capital flows into the protected sector in the long run. The implications of lobbying by third parties versus lobbying by the specific factors themselves are also examined.     

The acceptance,relevance and dominance of lobbying the EU Commission — a first‐time survey of the EU Commission's civil servants

Among public affairs techniques lobbying is by far the most mystifying one — at least in Europe. Lobbying comes from the Latin word ‘labium’ and means ‘entrance hall’ or ‘lounge’. Therein the essential meaning can be seen: today political decisions are not made in plenary assemblies but primarily in the pre‐political phase of balancing the various interests. Lobbying is to be understood as the ‘diverse intensive activities of social groups, chambers and companies in the political and bureaucratic vestibule’ (Beyme 1980). Modern lobbying on the EU level is an intermediary policy for the support of political decision making — even if some critics refuse to believe it. Lobbying at EU level has become a politically realistic dimension. Even if the mass media still take a very sceptical and negative view of lobbying in Brussels, based on the existing European taboo on influencing politics, an in‐depth analysis reveals various lobbies at work in EU institutions. Lobbying today is an essential part of all EU decision areas. This paper describes the functional theory approach of lobbying known as ‘cooperation as confrontation through communication’. For the first time, recipients of lobbying in the EU Commission are demonstrating their acceptance of lobbying efforts. The paper is based on the doctoral thesis ‘The acceptance, relevance and dominance of lobbying the EU Commission’ by Peter Koeppl, University of Vienna (unpublished). Copyright © 2001 Henry Stewart Publications     

Legitimacy through targeted transparency? Regulatory effectiveness and sustainability of lobbying regulation in the European Union

Regulating interest groups’ access to decision makers constitutes a key dimension of legitimate and accountable systems of government. The European Union explicitly links lobbying regulation with the democratic credentials of its supranational system of governance and proposes transparency as a solution to increase legitimacy and regulate private actors’ participation in policy making. This lobbying regulation regime consists of a Transparency Register that conditions access to decision makers upon joining it and complying with its information disclosure requirements. The extent to which transparency‐based regulatory regimes are successful in ensuring effective regulation of targeted actors and in being recognised as a legitimate instrument of governance constitutes a key empirical question. Therefore, the study asks: Do stakeholders perceive the transparency‐based EU lobbying regulation regime to be a legitimate form of regulatory governance? The study answers by building on a classic model of targeted transparency and proposes perceived regulatory effectiveness and sustainability as two key dimensions on which to evaluate the legitimacy of the Register. The arguments are tested on a new dataset reporting the evaluations of 1,374 stakeholders on the design and performance of the EU lobbying regulation regime. The findings describe a transparency regime that scores low in perceived effectiveness and moderate to low in sustainability. Citizens criticise the quality of information disclosed and the Register's performance as a transparency instrument. The Register did not effectively bridge the information gap between the public and interest groups about supranational lobbying. In terms of sustainability, interest organisations appreciate the systemic benefits of transparency, but identify few organisation‐level benefits. Organisations that are policy insiders incur more transparency costs so they instrumentally support transparency only insofar it suits their lobbying strategies and does not threaten their position. Insiders support including additional categories of organisations in the Register's regulatory remit but not more types of interactions with policy makers. They support an imperfect regulatory status quo to which they have adapted but lack incentives to support increased transparency and information disclosure. Targeted transparency proves an ineffective approach to regulating interest groups’ participation in EU policy making, constituting a suboptimal choice for ensuring transparent, accountable and legitimate supranational lobbying.     

Building Cooperation among Groups in Conflict: An Experiment on Intersectarian Cooperation in Lebanon

Societies divided along ethnic or religious lines suffer from persistent conflict and underprovision of public goods. Scholarly understanding of how to strengthen intergroup cooperation remains limited. In this study, we set out to test the effectiveness of two interventions on intergroup cooperation: cross‐group expert appeal and participation in a cross‐group discussion. The laboratory‐in‐the‐field experiment is set in Lebanon's capital, Beirut, and involves interactions between 180 Shia and 180 Sunni Muslim participants. We find that the expert appeal increases intersectarian cooperation in settings that do not entail reciprocal exchange. On average, cross‐sectarian discussions do not improve cooperation, but those discussions in which participants delve deeply into the conflict's causes and possible remedies are associated with greater cooperation. Neither intervention diminishes the effectiveness of sectarian clientelistic appeals. The policy implication of our study is that intergroup cooperation can be strengthened even in regions as bitterly divided as the Middle East.     

CITIZEN GROUPS AND ALTERNATIVE APPROACHES TO REGULATORY REFORM

Berry examines alternative regulatory reform proposals which could lead to greater citizens group control over regulatory policy making. Citizens groups have been handicapped by problems of maintaining large-scale lobbying efforts, seeing little in the way of long-term rewards for accomplishing deregulation, being unwilling to play the Congressional logrolling game, and simultaneously favoring regulation in one area and deregulation in another. The costs and benefits to citizen group organizations are emphasized in considering the alternatives they advocate. Citizen participation programs are seen as the most likely to expand in the future.     

How political and social change will transform the EU public affairs industry

The EU public affairs industry is failing to recognise that political and social change is rendering its traditional approach to lobbying redundant. The key change is the growing importance of public opinion. Politicians are tending to follow rather than lead public opinion. The public is becoming more individualistic and more prone to emotional appeals. Pressure groups are increasingly setting the political agenda. The Internet is reinforcing all these trends and multiplying the number of political actors. To survive and prosper, public affairs practitioners need to adopt a strategic view of public affairs, which is aligned with companies' brand strategies. This view must be based on a holistic view of politics and recognition that winning public trust, acceptance and support is the prerequisite of successful lobbying. The emphasis will therefore shift away from traditional elite lobbying towards NGO‐style campaigning and mobilisation of public support. Copyright © 2003 Henry Stewart Publications     

Firm size and regulatory compliance costs: The case of workers' compensation insurance

This paper examines the relative costs of workers' compensation insurance across firm-size groups, with particular focus on administrative scale economies (“compliance effects”) and biases in rate-setting (“enforcement effects”). Analyzing data on premiums and losses from the insurance industry, the authors find that the costs of insurance per dollar of loss are relatively high for very small firms. These higher costs reflect certain fixed administrative costs insurance companies must bear, but for extremely small firms these higher costs tend to be mitigated by an “enforcement” bias in state rate-setting outcomes. Due to imperfect experience-rating of insurance premiums, middle-sized firms—which have the highest losses—pay less per dollar of loss than either the smallest or largest firms. Indeed, it appears that large firms purchasing commercial workers' compensation insurance subsidize other size groups.     

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.     

Diluted regulations—a need to review the theoretical classification of the different lobbying regulatory environments

Regulation has been claimed to be acquired by the industry, yet while the economic regulation was often established with the approval and encouragement of the regulated industry, social regulation has usually been thrust upon industry following demands by public interest groups. Why would the social regulation still fail to produce behaviour, or results in accordance with the public interest, if the public interest groups initiated it? The failure to define clearly the concept of ‘public interest’ and the absence of adequately clear regulatory objectives would not provide all the convincing answers. The wish of the politicians to respond to a mischief before public concern dies down, seems to point towards the symbolic politics claims. Although lobbying is integral to democratic politics, it challenges the policy making process as the risks and opportunities associated with policy change are large. Lobbying regulations, belonging to the social regulations fold, have been observed as symbolic in Israel and are diluted by tricky loopholes. Recent research has used data from Centre of Public Integrity (CPI) in order to theoretically classify different regulatory environments. The CPI measures only what the law says, but it does not measure the outcome—the application of the law. This paper points out that the possible interaction of symbolic politics with social regulation may lead to the reoccurring legislative void, resulting in the dilution effect of the lobbying regulations, and it highlights the need to review the theoretical classification, and thereby, also the actual strength of the different regulatory environments. Copyright © 2013 John Wiley & Sons, Ltd.     

Pathways to cooperation among public agencies

This study explores forces that push public agencies to overcome barriers to cooperation. Case studies of nine groups of local school districts examined the pressures that shaped local participation in cooperative programs. The literature on relationships among organizations suggests six possible reasons to bear the costs of cooperation: to get more resources, to satisfy norms and values, to obtain political advantage, to solve problems, to reduce uncertainty, and to obey legal mandates. Data from the cases illustrate strengths and weaknesses of these six theoretical lines of argument as they apply to the decisions of public managers coping with complex realities. A process model of cooperation integrates the lessons of the data into a perspective that highlights the role of demands for improved performance. The model offers realistic guidance for the design of workable cooperative relationships.     

When Government Subsidizes Its Own: Collective Bargaining Laws as Agents of Political Mobilization

Government policies can activate a political constituency not only by providing material resources to, or altering the interpretive experiences of, individual citizens, but also by directly subsidizing established interest groups. We argue that state laws mandating collective bargaining for public employees provided organizational subsidies to public sector labor unions that lowered the costs of mobilizing their members to political action. Exploiting variation in the timing of laws across the states and using data on the political participation of public school teachers from 1956 to 2004, we find that the enactment of a mandatory bargaining law significantly boosted subsequent political participation among teachers. We also identify increased contact from organized groups seeking to mobilize teachers as a likely mechanism that explains this finding. These results have important implications for the current debate over collective bargaining rights and for our understanding of policy feedback, political parties and interest groups, and the bureaucracy.     

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.