 Policy-advising competition and endogenous lobbiesManuel Foerster and Daniel Habermacher Journal of Public Economics, 2025, vol. 245, issue C Abstract: We investigate Bertrand competition between experts in a policy-advising market. A policy-maker can either hire one of the experts or take the policy decision himself. The experts differ in policy competence and preferences and may either charge a fee or offer lobbying contributions. In equilibrium, the hired expert charges a fee if she has high policy competence and policy preferences are roughly aligned. Otherwise, the expert pays contributions—and thus acts as a lobbyist instead of as an advisor. Comparative statics show that more intense competition may even cause an expert previously hired at a positive price to engage in lobbying. Finally, we apply the model to competition between experts with different motives, reflecting the current debate about the role of professional consultants in advising governments. We show that the presence of able consultants may decrease social welfare if the policy issue is narrow and mainly concerns the policy-maker’s own voters. Our results give rise to alternative explanations for the empirical puzzle of why there is so little money in politics. Keywords: Policy advice; Money in politics; Political influence; Lobbying; Private information; Bertrand competition (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:245:y:2025:i:c:s0047272725000520 DOI: 10.1016/j.jpubeco.2025.105354 Access Statistics for this article Journal of Public Economics is currently edited by R. Boadway and J. Poterba More articles in Journal of Public Economics from Elsevier |
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