A simple model of the commercial lobbying industry

Thomas Groll and Christopher J. Ellis

European Economic Review, 2014, vol. 70, issue C, 299-316

Abstract: In this paper we present a model of the behavior of commercial lobbying firms (such as the so-called K-Street lobbyists of Washington, D.C.). In contrast to classical special interest groups, commercial lobbying firms represent a variety of clients and are not directly affected by policy outcomes. They are hired by citizens, or groups of citizens, to act as intermediaries on their behalf with policymakers. In our analysis we address two basic questions: what tasks are commercial lobbying firms performing, and what are the implications of their existence for social welfare? We answer the first part of this question by proposing that commercial lobbying firms possess a verification technology that allows them to improve the quality of information concerning the social desirability of policy proposals. This gives policymakers the incentive to allocate their scarce time to commercial lobbying firms. Essentially, it is this access to policymakers that commercial lobbying firms sell to their clients. To address the question of social welfare we construct a simple general equilibrium model that includes commercial lobbying firms, and compare the equilibrium obtained under market provision of lobbying services to the first best optimum. We find that the market level of lobbying services can be socially either too large or too small, and characterize when each will be the case.

Keywords: Commercial lobbying; Political access; Information acquisition; Financial contributions (search for similar items in EconPapers)
JEL-codes: D72 D82 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Working Paper: A Simple Model of the Commercial Lobbying Industry (2013)
Working Paper: A Simple Model of the Commercial Lobbying Industry (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:70:y:2014:i:c:p:299-316

DOI: 10.1016/j.euroecorev.2014.06.001

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