How is economic policy made? In this paper we study a key determinant of the answer to the question: lobbying by firms. Estimating a binary choice model of firm behavior, we find significant evidence for the idea that barriers to entry induce persistence in lobbying. The existence of these costs is further confirmed in studying how firms responded to a particular policy change: the expiration o...

This paper describes how wealth inequality may distort public resource allocation. A government seeks to allocate limited resources to productive sectors, but sectoral productivity is privately known by agents with vested interests in those sectors. They lobby the government for preferential treatment. The government—even if it honestly seeks to maximize economic efficiency—may be confounded by...

I analyze a model of interest group influence on legislative voting through information transmission. The model shows how interest groups may craft different messages to target different winning coalitions in order to influence the outcome. If access to legislators is costly then interest groups prefer to coordinate with allied legislators by providing them with information that helps them to p...

We examine the consequences of lobbying and vote buying, assuming this practice were allowed and free of stigma. Two “lobbyists” compete for the votes of legislators by o¤ering up-front payments to the legislators in exchange for their votes. We analyze how the lobbyists’budget constraints and legislator preferences determine the winner and the payments. JEL classi…cation numbers: P16, C72 Keyw...

This paper challenges the prevailing view that strict informational lobbying (in the absence of political contributions and evidence distortion) leads to better policy outcomes. Key to our analysis is the fact that policymakers are constrained on the number of issues they can address, which forces them to prioritize issues. We show how interest groups advocating reform on less-important issues ...

The effects of technological change have political implications. A "disturbance," such as the rise of the Internet as a mass medium, brings about new policy issues and establishes new interest organizations in the lobbying community. The differential mobilization of interests can affect the resolution of these policy issues. I combine face-to-face interviews with Washington representatives from...

I first provide a complete characterization of the unique equilibrium of the lottery game by n lobbyists with asymmetric valuations, and then compare the lottery and the all-pay auction models of lobbying. I show that the exclusion principle discovered by Baye, Kovenock and de Vries (1993) for all-pay auction does not apply to lottery. I also show that the perverse effect that an exogenous cap ...

The main drawback of the public-policy contest is that the notion of contest success function, a crucial component of the contest model, does not have microfoundations and, therefore, the random behavior of the government seems ad-hoc. In the present paper we propose a partial micro-foundation for the public-policy contest. The possible rationalization of random government behavior is illustrat...