Endogenous Cost Lobbying: Theory and Evidence

48 Pages Posted: 7 Aug 2009

See all articles by John M. de Figueiredo

John M. de Figueiredo

Duke University School of Law; Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Charles M. Cameron

Princeton University - Department of Political Science; Princeton University - Woodrow Wilson School of Public and International Affairs

Date Written: August 3, 2009

Abstract

Special interests attempt to influence lawmakers through campaign contributions and through informational lobbying. Both types of influence activities have been explored in theoretical models but only the former has received much empirical scrutiny. We provide the first empirical tests of a major class of models of costly legislative informational lobbying as distinct from campaign contributions, the Potters-van Winden-Grossman-Helpman (PWGH) signaling model. Using data derived from over 50,000 observations of annual lobbying expenditures by special interest groups in the American states, we find that, as predicted, special interest groups increase lobbying expenditures when the legislature is controlled by “enemies” rather than “friends.” In addition, lobbying expenditures vary across states with different budgeting institutions in ways predicted by the model, when it is extended to multiple periods. Overall, the results provide substantial support for the PWGH class of lobbying models.

Keywords: Lobbying, Law and Politics

JEL Classification: K0

Suggested Citation

de Figueiredo, John M. and Cameron, Charles M., Endogenous Cost Lobbying: Theory and Evidence (August 3, 2009). CELS 2009 4th Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=1443559 or http://dx.doi.org/10.2139/ssrn.1443559

John M. De Figueiredo (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative

215 Morris St., Suite 300
Durham, NC 27701
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Charles M. Cameron

Princeton University - Department of Political Science ( email )

Corwin Hall
Princeton, NJ 08544-1013
United States

Princeton University - Woodrow Wilson School of Public and International Affairs

Princeton University
Princeton, NJ 08544-1021
United States

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