Collective vs. individual lobbying

This paper presents a menu-auction model in which firms lobby the government to make an environmental regulation less burdensome. In this lobbying game, industrial interests are opposed by an environmental interest group. We compare political outcomes under two institutional arrangements. In the first, firms must join an organization that represents the interests of the industry. In the second, firms would lobby the government individually. The two arrangements result in strikingly different equilibrium outcomes. Only a small fraction of firms join the lobby group under collective lobbying, but all firms participate in lobbying activities when there is no such group. Thus, an attempt by firms to solve the apparent collective action problem through coordination would effectively backfire. The reason is that coordination among firms would increase the leverage available to the government, to demand high political contributions. We also evaluate the desirability of the two lobbying regimes from the private perspective of individual firms, and from the perspective of society as a whole. This permits us to evaluate possible restrictions on lobbying activities.     

Forest Conservation – Too Much or Too Little? A Political Economy Model

This paper studies the formation offorest policy when the government isinfluenced by an environmental lobbyand an industrial lobby representing anon-competitive wood processing industry.Government decides on forestconservation by way of restricting timberharvesting. Lobbying is modelledas a common agency game with differencesin the efficiency of lobbying. Acomparison of the political equilibriashows that an exporting forestindustry faces a stricter conservationrequirement than a forest industrywhose production is destined for domesticmarkets. If the industrial lobbyis more efficient than the environmentallobby, conservation is insufficientfrom the social point of view. However,conservation may be insufficienteven if the environmental lobby is moreefficient in lobbying than theindustrial lobby. This is because thelobbying effort of the environmentallobby also benefits consumers thatremain politically passive.     

Lobbying and the power of multinational firms

Can multinational firms exert more power than national firms by influencing politics through lobbying? To answer this question, we analyze the extent of national environmental regulation when policy is determined in a lobbying game between a government and a firm. We compare the resulting equilibrium regulation levels, outputs and welfare in a game with a multinational firm with those in an otherwise identical game with a national firm. For low transportation costs, output and pollution of a national firm are always as least as high as for a multinational; this changes for high transportation costs and intermediate damage parameters. When there is no lobbying, welfare levels are always higher with multinationals than with national firms. However, the existence of lobbying may reverse this ordering.     

行业协会的游说行为及其影响因素分析

根据对中国的全国性行业协会的调查,文章首先描述了全国性行业协会的游说态度和游说行为的现状,在此基础上,对影响行业协会游说行为的因素进行了分析。实证分析的结果表明,协会对游说的态度、协会成立的年限、协会的自主性和协会的代表性等因素对行业协会的游说行为具有显著的影响,而协会的规模与游说行为不存在显著的相关关系。     

Cross‐border Lobbying in Preferential Trading Agreements: Implications for External Tariffs and Welfare

This paper examines the effect of cross‐border lobbying on domestic lobbying and on external tariffs in both Customs Union (CU) and Free Trade Area (FTA). We do so by developing a two‐stage game which endogenizes the tariff formation function in a political economic model of the directly unproductive rent‐seeking activities type. We find that cross‐border lobbying un‐ambiguously increases both domestic lobbying and the equilibrium common external tariffs in a CU. The same result also holds for FTA provided tariffs for the member governments are strategic complements. We also develop a specific oligopolistic model of FTA and show that tariffs are indeed strategic complements in such a model.     

Lobbying against environmental regulation vs. lobbying for loopholes

We analyze the determinants of environmental policy when two industry lobbies can seek a laxer policy that would apply to both industries and loophole lobbying that provides benefits specific to one industry. We determine the properties of the lobbying equilibrium, including the resulting emissions level. In many cases, higher effectiveness of loophole lobbying is detrimental for industries and beneficial for environmental quality, as it exacerbates the free-rider problem in the provision of general lobbying by inducing industries to turn towards loophole lobbying.     

INTEREST GROUPS, INFLUENCE AND WELFARE

This paper examines the social costs and benefits of special interest group political influence activities. It is commonly recognized that, to the extent that such activities induce legislators to choose policies that favor the interest group at the expense of society at large, they can reduce welfare. It may also be the case, however, that lobbying can convey information held by interest groups to policy-makers. When costless announcements would not be credible, interest groups can signal their private information through costly influence activities. To the extent that this information enables governments to choose better policies, lobbying can enhance welfare. A simple game between a special interest group and a policy-maker that captures this tradeoff between the distortionary costs and the informational benefits of political influence activities is developed. Welfare properties of the equilibria are analyzed, and conditions are derived under which social welfare is greater when lobbying occurs than it would be if lobbying were prohibited. In conclusion, the phenomenon analyzed in this paper is related to Bhagwati's taxonomy of DUP activities.     

Endogenous market regulation in a signaling model of lobby formation

This paper aims at explaining industry protection in a context in which the government cannot observe the state of market demand. We develop an asymmetric information model and use the tools of contract theory in order to understand (1) how the level of industry protection is endogenously determined, and (2) why some industries decide to engage in large lobbying costs to become politically active. Our model offers plausible explanations to phenomena such as the “loser’s paradox”, where weak industries receive the most protection although strong industries are the ones that spend more resources on lobbying activities. The model also allows for an analysis of the influence that lobbying costs have on the decision to organize actively as a lobby.     

Protectionist Lobbying and Strategic Investment

Why are some uncompetitive industry sectors so effective in lobbying for greater protection and support? This paper attempts to explain the lobbying success of these industries in terms of the strategic role of investment in technology as a credible commitment device. By eschewing potentially profitable investment opportunities firms credibly signal to the government that the cost of a tariff reduction will be substantial. This enables the firms to lobby more effectively for policy concessions. Political considerations may therefore provide a significant incentive for firms to reject investment in newer technologies, even when these lower production costs.     

INTERNATIONAL CAPITAL MOBILITY AND TRADE POLITICS: CAPITAL FLOWS, POLITICAL COALITIONS, AND LOBBYING

Conventional wisdom holds that increasing international capital mobility reduces incentives for firms to lobby for trade protection. This paper argues that the effects of increased international capital mobility on the lobbying incentives of firms depend critically upon levels of inter-industry mobility. General-equilibrium analysis reveals that if capital is highly industry-specific, greater international mobility among some types of specific capital may increase lobbying incentives for owners of other specific factors and thereby intensify industry-based rent-seeking in trade politics. Evidence on levels of inward and outward investment in US manufacturing industries between 1982 and 1996, and on industry lobbying activities, indicate that these effects may be quite strong.     

On the Endogenous Choice between Protection and Promotion

In a model of strategic interaction between firms in lobbying activity, I show that capitalists might prefer tariffs (protection) to production subsidies (promotion). This is due to the congestion problem arising from the government's convex welfare costs of providing subsidies as opposed to both the free-rider problem and the congestion problem acting in opposite directions in the case of tariffs. If an industry association exists, coordination can be achieved when lobbying for tariffs, but not in the case of production subsidies.     

Investment under Uncertainty in Dynamic Conflicts

This paper analyses a model in which two groups repeatedly compete with each other for a prize in every time period. We assume that there is a status quo bias: if there is a fight today, yesterday's winner is in a stronger position than the other group. Hence, a change of the status quo has long-term consequences that groups need to take into account. Important applications of this model include lobbying for legislation and political transitions through revolutions. We analyse the strategic timing of attacks on the status quo, which is similar to investment decisions under uncertainty. We find that the attack threshold is considerably lower than in a comparable one-period game, and that the expenditure level necessary to change the status quo is low in comparison to the prize; this provides a possible solution to Tullock's "rent-seeking paradox" in lobbying.     

Regional Trade Agreements and Cross‐border Lobbying: Empirical Evidence from the Canada–US Free Trade Agreement Negotiations

This paper documents participation of special interest groups in negotiations of the Canada–US Free Trade Agreement. Using data on the tariff reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tariff reduction paths in both countries: phase‐out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.     

Endogenous trade policy in general equilibrium: An interaction of redistribution rule,trade openness,and labor market condition

Using a general equilibrium framework, the paper derives trade policy endogenously for a small country. It shows that, contrary to the existing literature, a lobbying industry is not guaranteed trade protection; it may even face trade taxes. Besides lobbying, trade policy depends on other factors such as the trade revenue distribution rule, income distribution across groups, trade openness, factor substitutability in production, industry employment size, and labor market flexibility. The paper also shows that the observed phenomenon of government preference for import tariffs over export subsidies—a long overdue puzzle—is an inherent outcome of lobbying equilibrium. It also shows that trade policies such as import tariffs and export taxes that have the same impact on economic market—Lerner symmetry (1936)—are driven by the same forces in the political market.     

Strategic restraint in contests

Economic policy is modelled as the outcome of a (political) game between two interest groups. The possible ex-post (realized) outcomes in the game correspond to the proposed policies. In the literature policy proposals are exogenous. We extend such games by allowing the endogenous determination of the proposed policies. In a first stage the groups decide which policy to lobby for and then, in a second stage, engage in a contest over the proposed policies. Our main result is that competition over endogenously determined policies induces strategic restraint that reduces polarization and, in turn, wasteful lobbying activities.     

WHY A FREE TRADE AREA? THE TARIFF ALSO RISES*

This paper considers the choice between a customs union (wherein partners share a common external tariff) and a free trade area (wherein each partner chooses its own tariff against non-members). Following the result that a customs union dominates a free trade area, with coordination of domestic tax policies, we show that a free trade area may nevertheless be chosen if tariffs are determined endogenously through industry lobbying. This is so even when the free trade area equates producer prices within its borders and induces tariff revenue competition and whether or not there is domestic free-riding in lobbying.     

区域土地循环利用的过程控制:博弈分析的视角

将声誉和地方政府保护作为重要影响因子引入地方土地监管部门与土地使用者之间的博弈分析模型。研究显示:由于地方监管部门存在受土地使用者收买可能及其本身存在监督成本限制,地方监管部门不能完全有效监督土地使用者循环用地情况,并存在一定的政府失灵问题。因此,将中央政府作为土地使用者循环用地过程控制的二次监管者,对政府失灵问题能产生有效纠正,这为改进目前监管模式提出了新的启示。     

Influence in Decline: Lobbying in Contracting Industries

Recent empirical work suggests that declining industries lobby more successfully for policy concessions than do growing industries. This paper presents a novel and simple explanation for this phenomenon. It is shown that an industry in decline is constrained in its ability to raise revenue through production and therefore has a greater incentive to protect profits by lobbying for more favourable treatment. However, greater lobbying only translates into policy concessions if government policy is sufficiently responsive to lobby group contributions. The paper further explores the circumstances under which such government behaviour is likely to eventuate. We show that a self-interested government will always be more receptive to the demands of lobbyists in declining industries.     

Lobbying under political uncertainty

This paper considers a model of lobbying described as a common agency game; it departs from the current literature by assuming that the special interest groups are not a priori organized or unorganized and that the type of the politician is not common knowledge. We characterize equilibria when the choice set of the politician consists of two policies; we discuss the conditions leading to efficiency and the characteristics of the groups explaining their relative success in the process of influence. We also offer some results for the general case, including disjoint necessary and sufficient conditions for the equilibria to be efficient.     

Microfoundations of pressure group competition

The core of the model is the explicit microeconomic investigation of pressure group formation, activity, and interaction. At the first stage we envisage two groups consisting of those individuals who are willing to pay for an increase or a decrease, respectively, of some public good relative to the government proposal. Each of these groups play noncooperative lobby-formation game and forms, under certain conditions, a lobbying organization being financed out of uniform membership dues. At the second stage the competition among these lobbies is again modelled as a noncooperative game.