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Lobbying as a Guard against Extremism

Zudenkova Galina ()
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Zudenkova Galina: Department of Economics, University of Mannheim, D-68131 Mannheim, Germany

The B.E. Journal of Economic Analysis & Policy, 2017, vol. 17, issue 1, 17

Abstract: This paper analyzes endogenous lobbying over a unidimensional policy issue. Individuals differ in policy preferences and decide either to take part in lobbying activities or not. They are assumed to be group rule-utilitarian such that they follow the rule that, if followed by everyone else in their special interest group, would maximize their group’s aggregate welfare. Once formed, lobbies make contributions to the incumbent government in exchange for a policy favor as in a common-agency model. I show the existence of equilibrium with two organized lobbies. Individuals with more extreme preferences are more likely to join lobbying activities. Therefore, the lobbyists are rather extremists than moderates. However, the competition between those extreme lobbies results in a more moderate policy outcome relative to that initially preferred by the biased government. Lobbies therefore guard against extremism, while acting as moderators of the government’s preferences.

Keywords: common agency; endogenous lobbying; extremism (search for similar items in EconPapers)
JEL-codes: D72 (search for similar items in EconPapers)
Date: 2017
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