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Politician preferences and caps on political lobbying

Ivan Pastine and Tuvana Pastine

No 200619, Working Papers from School of Economics, University College Dublin

Abstract: This paper extends Che and Gale (1998) by allowing the incumbent politician to have a preference for the policy position of one of the lobbyists. The effect of a contribution cap is analyzed where two lobbyists contest for a political prize. The cap always helps the lobbyist whose policy position is preferred by the politician no matter whether it is the high-valuation or the low-valuation contestant. In contrast to Che and Gale, once the cap is binding a more restrictive cap always reduces expected aggregate contributions. However, the politician might support the legislation of a barely binding cap. When politician policy preferences perfectly reflect the will of the people, a more restrictive cap is always welfare increasing. When lobbyist’s valuations completely internalize all social costs and benefits, a cap is welfare improving if and only if the politician favors the high-value policy. Even a barely binding cap can have significant welfare consequences.

Keywords: All-pay auction; Campaign finance reform; Explicit ceiling; Political campaigns--Mathematical models; Campaign funds; Noncooperative games (Mathematics) (search for similar items in EconPapers)
JEL-codes: C72 D72 (search for similar items in EconPapers)
Date: 2006-11
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http://hdl.handle.net/10197/700 First version, 2006 (application/pdf)

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