Policy Bias Equivalence under Common Agency |
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Authors: | Mike Felgenhauer |
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Institution: | (1) Department of Economics, University of Mannheim, 68131 Mannheim, Germany |
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Abstract: | This paper studies interest group influence on policy making. Lobbying occurs in a first price auction where an interest group
wins with certainty, if her bid exceeds the loser’s bid by the policy maker’s valuation for the socially best policy. Otherwise
the latter implements the privately known best policy. In equilibrium the size of the policy maker’s valuation does not matter for the size of the policy bias. The idea is to construct a “reference game”
and to shift the support of the equilibrium mixed strategies into the original game, without altering the structure of the
densities. |
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Keywords: | lobbying common agency common value |
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