Lobbying and compromise

The compromise enhancing effect of lobbying on public policy has been established in two typical settings. In the first, lobbies are assumed to act as “principals” and the setters of the policy (the candidates in a Downsian electoral competition or the elected policy maker in a citizen-candidate model of electoral competition) are conceived as “agents”. In the second setting, the proposed policies are solely determined by the lobbies who are assumed to take the dual role of “principals” in one stage of the public-policy game and ‘agents’ in its second stage. The objective of this paper is to demonstrate that in the latter setting, the compromising effect of lobbying need not exist. Our reduced-form, two-stage public-policy contest, where two interest groups compete on the approval or rejection of the policy set by a politician, is sufficient to show that the proposed and possibly implemented policy can be more extreme and less efficient than the preferred policies of the interest groups. In such situations then more than the calf (interest groups) wish to suck the cow (politician) desires to suckle thereby threatening the public well being more than the lobbying interest groups. The main result specifies the conditions that give rise to such a situation under both the perfectly and imperfectly discriminating contests.     

Lobbying and asymmetric information

Informational lobbying — the use by interest groups of their (alleged) expertise or private information on matters of importance for policymakers in an attempt to persuade them to implement particular policies — is often regarded as an important means of influence. This paper analyzes this phenomenon in a game setting. On the one hand, the interest group is assumed to have private information which is relevant to the policymaker, whilst, on the other hand, the policymaker is assumed to be fully aware of the strategic incentives of the interest group to (mis)report or conceal its private information. It is shown that in a setting of partially conflicting interests a rationale for informational lobbying can only exist if messages bear a cost to the interest group and if the group's preferences carry information in the ‘right direction’. Furthermore, it is shown that it is not the content of the message as such, but rather the characteristics of the interest group that induces potential changes in the policymaker's behavior. In addition, the model reveals some interesting results on the relation between, on the one hand, the occurrence and impact of lobbying and, on the other hand, the cost of lobbying, the stake which an interest group has in persuading the policymaker, the similarity between the policymaker's and the group's preferences, and the initial beliefs of the policymaker. Moreover, we relate the results to some empirical findings on lobbying. qu]Much of the pressure placed upon government and its agencies takes the form of freely provided “objective” studies showing the important outcomes to be expected from the enactment of particular policies (Bartlett, 1973: 133, his quotation marks). qu]The analysis here is vague. What is needed is an equilibrium model in which lobbying activities have influence. Incomplete information ought to be the key to building such a model that would explain why lobbying occurs (information, collusion with decision makers, and so on) and whether lobbying expenses are socially wasteful. (Tirole, 1989: Ch. 1.3, p. 77, Rentseeking behavior).     

Lobbying, corruption and political influence

The paper explores the determinants of generalized trust across countries. The findings suggest that only few variables can be considered significant. Social polarization in the form of income inequality and ethnic diversity reduces trust, Protestantism and having a monarchy increases trust while post-communist societies are less trusting than other. The findings also provide support for the use of a standard indicator as a stable measure of generalized trust and emphasize the importance of taking endogeneity seriously.     

Lobbying and (de)centralization

This paper presents a positive theory of (de)centralization of policy decisions in an international union -defined as a supranational jurisdiction that may exercise a policy prerogative on behalf of member countries. I build a benchmark model where national lobbies can coordinate (i.e. form a trans-national lobby) at no cost and show that lobbying does not affect the fiscal regime. On the other hand, when interest groups cannot coordinate, decentralization emerges as a political equilibrium with lobbying. Policy centralization hurts national lobbies by increasing competition for influence. At a constitutional stage, interest groups induce politically motivated governments to reject centralization. Three extensions show that this result depends on the level of cross-border externalities; the voting rule at the constitutional stage; and the details of the institutional decision mechanism under centralization.     

Persuasive Lobbying with Allied Legislators

Why do interest groups lobby allied legislators if they already agree? One possibility is that allies are intermediaries who help persuade unconvinced legislators. To study the role and value of intermediaries, I develop a formal model of persuasive lobbying where interest groups use public cheap talk and provide verifiable information to a strategically selected coalition of legislators. Interest groups face a trade-off: Lobbying aligned legislators is advantageous as they are more willing to endorse the group's preferred policy, but those who are too aligned cannot persuade a majority of their peers. The model illustrates how intermediaries are especially valuable if interest groups cannot persuade a majority themselves. Counter to previous work, the results demonstrate how a legislature's ideological composition determines the use of intermediaries. Groups may lobby intermediaries even if access to legislators is free and unrestricted.     

Lobbying by Law Firms: A Study of Lobbying by National Law Firms in Canberra1

This article examines the way in which national law firms lobby the federal government from their Canberra offices. It is based on extensive interviews with lobbyists from those law firms, other commercial lobbyists in Canberra and legal professional bodies. The article begins by establishing the unique nature of law firm lobbying. In particular, it looks at the technical skills law firm lobbyists possess, their access to specialist legal knowledge and their preference for administrative, over political, lobbying. The development of law firm lobbying is then discussed. This centres around changes to the legal profession, federal business laws and federal government decision-making. The article concludes by suggesting that law firm lobbying both reflects and stimulates changes in government decision-making and will grow in importance as the legal profession in Canberra grows.     

Lobbying and the measurement of conventional welfare cost

I would like to thank Michael Ormiston, Janet Smith and Scott Smith for several helpful discussions.     

Lobbying in the 21st century

This paper suggests that the nature of activism is changing to take account of the shifts in political and economic conditions. It further goes on to consider that as a result of these emerging trends we have witnessed a generational shift in how governments, businesses, interest groups and citizens will interact. It is possible to place the issues and questions that this new environment raises under a number of broad headings—Democracy and Dissent, Government and Parliament, Media, and Lobbying –each of which the paper deals with in turn. Copyright © 2003 Henry Stewart Publications.     

On the Efficiency of By-Product Lobbying

To explain the existence of large lobbying groups, Olsonproposes a `by-product theory': large lobbies are by-productsof industry associations that operate as monopolists inprivate goods markets. This paper explicitly formulatesOlson's by-product theory of lobby funding and examines itsefficiency as a funding method. Lobbying efficiency isenhanced by the association's ability to price-discriminate.Price discrimination, in turn, is facilitated by theassociation's superior knowledge of its members'characteristics. The paper also examines the relationshipbetween lobby strength and industry size, as well as thequestion of `who exploits whom' under by-product lobbying.     

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.     

Lobbying and Concessions: Comparing Nash to Stackelberg Games

We analyze how the standardresults in lobbying theory change when one side has asecond instrument at its disposal. We look at theeffect concessions by one side have on the outcome ina Nash and a Stackelberg game.     

Lottery Versus All-Pay Auction Models of Lobbying

I first provide a complete characterizationof the unique equilibrium of thelottery game by n lobbyists with asymmetricvaluations, and then compare the lotteryand the all-pay auction models of lobbying.I show that the exclusion principlediscovered by Baye, Kovenock and de Vries(1993) for all-pay auction does not applyto lottery. I also show that the perverse effectthat an exogenous cap may increase thetotal lobbying expenditure in a two-bidderall-pay auction discovered by Che and Gale(1998) does not apply to lottery.     

Private Bills: A Theoretical and Empirical Study of Lobbying

Interest groups lobby over a variety of issues includingprivate bills. There are two striking facts about privatebills introduced in the U.S. Congress. First, several scandalshave involved Congressmen who were being bribed to introduce aprivate bill. Second, the number of private bills introducedhas drastically changed over time. A theoretical model and aneconometric model are developed to explain these phenomena.     

Lobbying when the decisionmaker can acquire independent information

Politicians trade off the cost of acquiring and processing information against the benefit of being re-elected. Lobbyists may possess private information upon which politicians would like to rely without the effort of verification. If the politician does not try to verify, however, the lobbyist has no incentive to be truthful. This is modelled as a game in which the lobbyist lobbies to show his conviction that the electorate is on his side. In equilibrium, sometimes the politician investigates, and sometimes the information is false. The lobbyists and the electorate benefit from the possibility of lobbying when the politician would otherwise vote in ignorance, but not when he would otherwise acquire his own information. The politician benefits in either case. Lobbying is most socially useful when the politician's investigation costs are high, when he is more certain of the electorate's views, and when the issue is less important.