Journal article

Informational lobbying and political contributions

M Bennedsen, SE Feldmann

JOURNAL OF PUBLIC ECONOMICS | ELSEVIER SCIENCE SA | Published : 2006

Abstract

Interest groups can potentially influence political decision-makers by offering contributions and by providing relevant information that sways the decision in the group's favor. What mix of these two instruments should an interest group choose, and how does the use of one instrument affect the effectiveness of the other? In this paper we identify an information externality that raises the cost of offering contributions and show that this indirect search cost reduces the group's incentive to gather information when contributions are allowed. Furthermore, we analyze how competition among lobby groups as providers of information and contributions affect the choice and effectiveness of the instr..

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University of Melbourne Researchers