Symmetric vs asymmetric equilibria and stochastic stability in a dynamic game of legislative lobbying

Raouf Boucekkine (), Fabien Prieur and Benteng Zou

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: We study a 2-players stochastic dynamic symmetric lobbying differential game. Players have opposite interests; at any date, each player invests in lobbying ac- tivities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We prove that while a symmetric Markov Perfect Equilibrium (MPE) always exists, an asymmetric MPE only emerges when uncertainty is large enough. In the latter case, the legislative state converges to a stationary invariant distribution. Interestingly enough, the implications for the rent dissipation problem are much more involved than in the deterministic coun- terpart: the symmetric MPE still yields a limited social cost while the asymmetric may yield significant losses. We also characterize the most likely asymptotic state, in particular regarding the level of uncertainty.

Keywords: Political lobbying; symmetric versus asymmetric equilibrium; stochastic differential games; stochastic stability; social cost of lobbying (search for similar items in EconPapers)
JEL-codes: C73 D72 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying (2018)
Working Paper: Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:18-03

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