“When Olson Meets Dahl”: From Inefficient Groups Formation to Inefficient Policy Making

Perrin Lefebvre and David Martimort
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Perrin Lefebvre: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: Two conflicting interest groups buy favor from a policy maker. Influence is modeled as a common-agency game with lobbyists proposing monetary contributions contingent on decisions. When the preferences of the group members are common knowledge, groups form efficiently and lobbying competition perfectly aggregates preferences. When those preferences are instead private information, free riding in collective action arises within groups. Free riding implies that the influence of a group is weakened and that lobbying competition imperfectly aggregates preferences. By softening lobbying competition, private information might also increase groups' payoffs and hurt the policy maker. Importantly, the magnitudes of informational frictions within each group are jointly determined at equilibrium. We draw from these findings a number of implications for the organization of interest groups.

Keywords: Lobbying; Collective action; Free riding; Asymmetric information; Common agency; Mechanism design (search for similar items in EconPapers)
Date: 2020-07
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Published in Journal of Politics, 2020, 82 (3), pp.1026-1043. ⟨10.1086/707586⟩

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Related works:
Working Paper: “When Olson Meets Dahl”: From Inefficient Groups Formation to Inefficient Policy Making (2020)
Working Paper: "When Olson Meets Dahl": From Inefficient Groups Formation to Inefficient Policy-Making (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-02875061

DOI: 10.1086/707586

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