Policy Influence and Private Returns from Lobbying in the Energy Sector

Firms lobby the U.S. Congress to in uence policy-making. This paper quanti es the extent to which lobbying expenditures a ect policy enactment. First, I construct a novel dataset comprised of federal energy legislation and lobbying activities by the energy sector during the 110th Congress. Second, I develop and estimate a gametheoretic model where heterogeneous players choose lobbying expenditures to a ect the probability that a policy is enacted. I nd that the e ect of lobbying expenditures on a policy's equilibrium enactment probability is very small. However, the average returns from lobbying expenditures are estimated to be over 140%.