Procurement Lobbying

Roberto Burguet and József Sákovics
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Roberto Burguet: University of Central Florida

No 306, Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: We study lobbying in the context of (competitive) procurement. We propose a tractable, Bayesian model to analyze lobbying-effort and pricing decisions. Lobbying conveys information, even if biased, to the buyer. This allows the buyer to improve the expected value of the match, but it also increases product di§erentiation, and thus raises prices. When inexpensive, lobbying always happens in equilibrium, even if it is often not profitable. If he anticipates it, the buyer always benefits from a monopolistís lobbying, but he might be hurt by the lobbying of two competing sellers.

Pages: 36 pages
Date: 2022-01
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