Lobbying for government appropriations

Christian Cox

RAND Journal of Economics, 2023, vol. 54, issue 3, 443-483

Abstract: This article investigates the effect of lobbying on government contract allocation. I consider how lobbying affects both total contract spending and the distribution of contracts between firms. I solve a novel contest model which incorporates these two effects, and then I structurally estimate it using a panel of federal contractors. The results suggest that lobbying increases contract spending by $8.837 billion (3.22%) per year. However, its effects on the observed contract distribution and firm revenues are relatively small. Lastly, I find that increasing competition in procurement generally results in less lobbying.

Date: 2023
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https://doi.org/10.1111/1756-2171.12447

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