REPEATED LOBBYING BY COMMERCIAL LOBBYISTS AND SPECIAL INTERESTS

Developing a lobbying model of repeated agency, we explain previously unexplained features of the real‐world lobbying industry. Lobbying is divided between direct representation by special interests to policymakers, and indirect representation where special interests employ professional intermediari...

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Bibliographic Details
Published in:Economic inquiry 2017-10, Vol.55 (4), p.1868-1897
Main Authors: Groll, Thomas, Ellis, Christopher J.
Format: Article
Language:English
Subjects:
Analysis
Enforcement
Fund raising
Information
Interest groups
Lobbying
Lobbyists
Nepotism
Policy making
Resource allocation
Studies
Welfare
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Summary:Developing a lobbying model of repeated agency, we explain previously unexplained features of the real‐world lobbying industry. Lobbying is divided between direct representation by special interests to policymakers, and indirect representation where special interests employ professional intermediaries called commercial lobbyists to lobby policymakers on their behalf. Our analytical structure allows us to explain several trends in lobbying. For example, using the observation that in the United States over the last 20 years, policymakers have spent an increasing amount of their time fundraising as opposed to legislating, we are able to explain why the share of commercial lobbyist activity in total lobbying has risen dramatically and now constitutes over 60% of the total. The key scarce resource in our analysis is policymakers' time. Policymakers allocate this resource via implicit repeated agency contracts that are used to incent special interests and commercial lobbyists to provide a mix of financial contributions and information on policy proposals. These implicit agency contracts solve both an information problem in the presence of unverifiable policy information and a contracting problem in the absence of legal enforcement. These repeated relationships, that are often described using the pejorative term “cronyism” in the popular press, may in certain circumstances be welfare improving. (JEL D72, D82, H1, P16)
ISSN:0095-2583
1465-7295
DOI:10.1111/ecin.12473