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Policy-advising Competition and Endogenous Lobbies

Author

Listed:
  • Manuel Foerster

    (Bielefeld University)

  • Daniel Habermacher

    (Universidad de los Andes, Chile)

Abstract

We investigate competition between experts with different motives. A policy-maker has to implement a policy and can either acquire information herself or hire a biased but well-informed expert. We show that the expertcharges a fee if interests between the agents are roughly aligned, and pays contributions in order to get the decision delegated—and thus acts as a lobbyist instead of as an advisor—if the conflict of interest is substantial and the policy is important to her. We then introduce an unbiased careerconcerned expert and show that lobbying may occur because of competition. Finally, the effect of competition on societal welfare may be negative if policy is (not) important to society but the unbiased expert provides bad (good) advice.

Suggested Citation

  • Manuel Foerster & Daniel Habermacher, 2023. "Policy-advising Competition and Endogenous Lobbies," Working Papers 229, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:229
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/229.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Policy advice; private information; delegation; lobbying; competition;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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