Information transmission and inefficient lobbying

Rafael Lima and Humberto Moreira ()

Games and Economic Behavior, 2014, vol. 86, issue C, 282-307

Abstract: In a seminal paper, Grossman and Helpman (1994) introduced a framework to understand how lobbying influences the choice of import/export tariffs. In this paper we extend their analysis and assume that lobbies have private information to analyze the effects of information transmission in a Grossman and Helpman lobby game. Information transmission leads to two agency costs. One refers to the cost of signaling and the other to the cost of screening the lobby's competitiveness. The signaling cost reduces distortions resulting from the screening cost. On the other hand, distortions from the screening cost enhance the signaling cost. The two combined effects generate more distortions in the political game than each effect separately. Tariff protection and lobbies' rents are lower than those found in Grossman and Helpman's truthful equilibrium. Therefore, information transmission may improve welfare through the reduction of rent-seeking activities.

Keywords: Lobby; Asymmetric information; Common agency; Political economy (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 (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825614000414
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:86:y:2014:i:c:p:282-307

DOI: 10.1016/j.geb.2014.02.010

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().