Special Interest Politics: Contribution Schedules vs. Nash Bargaining

18 Pages Posted: 12 Jun 2018

See all articles by Achim Voss

Achim Voss

University of Hamburg - Department of Economics

Mark Schopf

FernUniversität in Hagen

Date Written: July 2018

Abstract

The article compares two models of lobby influence on policy choice: The Grossman and Helpman (1994) contribution‐schedules model and a negotiation between the lobbies and the government summarized by a Nash‐bargaining function. The literature uses the models interchangeably because they imply the same equilibrium policy. We show that particular assumptions about bargaining power and disagreement utility in the Nash‐bargaining solution are required for the models to lead to the same equilibrium payments and utilities. This implies that the models usually imply different sets of lobbies if lobby formation is an endogenous decision, such that the equilibrium policies also differ.

Keywords: common‐agency model, lobbying, Nash bargaining, policy distortions, political economy

Suggested Citation

Voß, Achim and Schopf, Mark, Special Interest Politics: Contribution Schedules vs. Nash Bargaining (July 2018). Economics & Politics, Vol. 30, Issue 2, pp. 256-273, 2018. Available at SSRN: https://ssrn.com/abstract=3192693 or http://dx.doi.org/10.1111/ecpo.12107

Achim Voß (Contact Author)

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

HOME PAGE: http://www.wiso.uni-hamburg.de/professuren/mikrooekonomische-theorie-und-experimente/team/wissenscha

Mark Schopf

FernUniversität in Hagen ( email )

Universitätsstrasse 41
Feithstrathe 140
Hagen, 58084
Germany

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