Repeated Lobbying by Commercial Lobbyists and Special Interests

30 Pages Posted: 28 Aug 2017

See all articles by Thomas Groll

Thomas Groll

Columbia University - School of International and Public Affairs; Institute for Corruption Studies

Christopher J. Ellis

University of Oregon - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: October 2017

Abstract

Developing a lobbying model of repeated agency, we explain previously unexplained features of the real‐world lobbying industry. Lobbying is divided between direct representation by special interests to policymakers, and indirect representation where special interests employ professional intermediaries called commercial lobbyists to lobby policymakers on their behalf. Our analytical structure allows us to explain several trends in lobbying. For example, using the observation that in the United States over the last 20 years, policymakers have spent an increasing amount of their time fundraising as opposed to legislating, we are able to explain why the share of commercial lobbyist activity in total lobbying has risen dramatically and now constitutes over 60% of the total. The key scarce resource in our analysis is policymakers' time. Policymakers allocate this resource via implicit repeated agency contracts that are used to incent special interests and commercial lobbyists to provide a mix of financial contributions and information on policy proposals. These implicit agency contracts solve both an information problem in the presence of unverifiable policy information and a contracting problem in the absence of legal enforcement. These repeated relationships, that are often described using the pejorative term “cronyism” in the popular press, may in certain circumstances be welfare improving.

JEL Classification: D72, D82, H1, P16

Suggested Citation

Groll, Thomas and Ellis, Christopher J., Repeated Lobbying by Commercial Lobbyists and Special Interests (October 2017). Economic Inquiry, Vol. 55, Issue 4, pp. 1868-1897, 2017, Available at SSRN: https://ssrn.com/abstract=3026804 or http://dx.doi.org/10.1111/ecin.12473

Thomas Groll (Contact Author)

Columbia University - School of International and Public Affairs ( email )

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HOME PAGE: http://www.columbia.edu/~tg2451

Institute for Corruption Studies

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Christopher J. Ellis

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

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