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Lobbying: Buying and utilizing access

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  • Mayer, Wolfgang
  • Mujumdar, Sudesh

Abstract

This paper develops a lobbying-by-firms model that draws on a more realistic characterization of the lobbying process; influence-seeking requires both money to 'buy access' and managerial time to 'utilize access'. This, more realistically grounded, modeling approach furnishes theoretical support for why one encounters different numbers of lobbying firms of varying sizes in different industries, without casting the (unrealistic) lifeline of the 'money-buys-policies' assumption or (unrealistically) casting out the role of money from the lobbying process. Theoretical legs are also furnished for the empirical finding of a negative and statistically significant (at the 1% level) relationship between industry concentration and 'direct lobbying' by the industry. Additional insights emerge from the model regarding how a cap on the lobbying-contributions of firms results, in fact, in an expansion of the amount of access-time purchased by some firms, and how a decline in the world price of an industry's good can generate greater inequality in access to politicians.

Suggested Citation

  • Mayer, Wolfgang & Mujumdar, Sudesh, 2014. "Lobbying: Buying and utilizing access," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-35.
    • Handle: RePEc:zbw:ifweej:20142
    DOI: 10.5018/economics-ejournal.ja.2014-2
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    References listed on IDEAS

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    1. Grossman, Gene M. & Helpman, Elhanan, 1995. "Technology and trade," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 25, pages 1279-1337, Elsevier.
    2. Gawande, Kishore, 1997. "US non-tariff barriers as privately provided public goods," Journal of Public Economics, Elsevier, vol. 64(1), pages 61-81, April.
    3. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    4. Magee, Christopher, 2002. "Endogenous trade policy and lobby formation: an application to the free-rider problem," Journal of International Economics, Elsevier, vol. 57(2), pages 449-471, August.
    5. Pecorino, Paul, 1998. "Is There a Free-Rider Problem in Lobbying? Endogenous Tariffs, Trigger Strategies, and the Number of Firms," American Economic Review, American Economic Association, vol. 88(3), pages 652-660, June.
    6. Devashish Mitra, 2016. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 1, pages 3-21, World Scientific Publishing Co. Pte. Ltd..
    7. Wolfgang Mayer & Sudesh Mujumdar, 2003. "Endogenous Lobbying in Search of Import Protection," Rivista di Politica Economica, SIPI Spa, vol. 93(1), pages 119-148, January-F.
    8. Jean-Jacques Laffont, 1989. "The Economics of Uncertainty and Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121360, December.
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    Cited by:

    1. Brodmann, Jennifer & Unsal, Omer & Hassan, M. Kabir, 2019. "Political lobbying, insider trading, and CEO compensation," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 548-565.

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    More about this item

    Keywords

    Lobbying; free-rider problem; size-distribution-of-firms; world-price; labormarket-flexibility;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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