Merchants of Reputation: Privatization Under Elites' Outside Lobbying

Posted: 31 Aug 2020 Last revised: 21 Apr 2021

See all articles by Arduino Tomasi

Arduino Tomasi

London School of Economics & Political Science (LSE) - Department of Government

Date Written: September 21, 2020

Abstract

An economic elite wants to buy a public asset as cheaply as possible. Its ownership is decided by an incumbent politician who can be of high or low competence. The elite can make a buying offer for the asset and manipulate the information that is available to voters about the incumbent's competence. By attacking the incumbent (trying to uncover bad news about his competence before making him an offer) or threatening him (with uncovering bad news if he refuses to sell), I show that the elite can reduce the prices that the incumbent would accept for selling the asset. I also show that the elite often (but not always) uses threats against a leading incumbent (one who has better reputation than his challenger) and attacks against a trailing one. I further find that a better reputation can actually render an incumbent more susceptible to the elite's influence.

Keywords: Bayesian persuasion, Elections, Elites, Outside Lobbying, Privatization

JEL Classification: D70, D72, D74, D80, D83

Suggested Citation

Tomasi, Arduino, Merchants of Reputation: Privatization Under Elites' Outside Lobbying (September 21, 2020). Available at SSRN: https://ssrn.com/abstract=3658375 or http://dx.doi.org/10.2139/ssrn.3658375

Arduino Tomasi (Contact Author)

London School of Economics & Political Science (LSE) - Department of Government ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.arduinotomasi.com

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