Relational Political Contribution under Common Agency∗

A model of political contribution of dynamic common agency where state-contingent agreements must be self-enforced is considered. Two issues are mainly examined; punishment strategy on deviation and the limit and scope of implicit agreements. The punishment strategy on the principals takes a form of two-phase scheme in general and, more specifically, it is either an “Exclusion-type”, on which the bad decision on the deviator is keep to be chosen over time, or a “Sanction-type” which is indeed same as the so-called stick-and-carrot strategy. Furthermore we characterize the payoff set of the equilibria on which the same decision is chosen by the agent through implicit agreements and compare it with those in the standard static menu auction model. One of the main implications is that there could be an equilibrium outcome which cannot be supported on our model even the discount factor is close to one. Keyword: Common Agency, Relational Contract, Lobbying JEL classification: D86, C73, D72, L14