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Article
Informational Lobbying and Political Contributions
Journal of Public Economics (2006)
  • Sven Feldmann
  • Morten Bennedsen, Copenhagen Business School
Abstract
Interest groups can potentially influence political decision-makers by offering contributions and by providing relevant information that sways the decision in the group's favor. What mix of these two instruments should an interest group choose, and how does the use of one instrument affect the effectiveness of the other? In this paper we identify an information externality that raises the cost of offering contributions and show that this indirect search cost reduces the group's incentive to gather information when contributions are allowed. Furthermore, we analyze how competition among lobby groups as providers of information and contributions affect the choice and effectiveness of the instruments. We show that the information externality rewards the group that can abstain from information search and focus its influence on contributions.
Keywords
  • Lobbying; Political contributions; Asymmetric information; Common agency
Disciplines
Publication Date
May, 2006
Citation Information
Sven Feldmann and Morten Bennedsen. "Informational Lobbying and Political Contributions" Journal of Public Economics Vol. 90 Iss. 4-5 (2006)
Available at: http://works.bepress.com/sven_feldmann/1/