The Effectiveness of Caps on Political Lobbying

M. Matejka, A.M. Onderstal, A.M.B. De Waegenaere

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Abstract

In this paper, we analyze a lobby game, modelled as an all-pay auction in which interest groups submit bids in order to obtain a political prize.The bids are restricted to be below a cap imposed by the government.For both an incomplete and a complete information setting we show the following results. While ex post a lower cap may lead to higher lobbying expenditures, ex ante a lower cap always implies lower expected total lobbying expenditures.The incompletely informed government maximizes social welfare by implementing a cap equal to zero.
Original languageEnglish
Place of PublicationTilburg
PublisherAccounting
Number of pages25
Volume2002-44
Publication statusPublished - 2002

Publication series

NameCentER Discussion Paper
Volume2002-44

Keywords

  • lobbying
  • auctions
  • game theory

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    Matejka, M., Onderstal, A. M., & De Waegenaere, A. M. B. (2002). The Effectiveness of Caps on Political Lobbying. (CentER Discussion Paper; Vol. 2002-44). Accounting.