Special interest politics: Contribution schedules vs. Nash bargaining

Special interest politics: Contribution schedules vs. Nash bargaining 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics & Politics Wiley

Special interest politics: Contribution schedules vs. Nash bargaining

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Publisher
Wiley
Copyright
Copyright © 2018 John Wiley & Sons Ltd
ISSN
0954-1985
eISSN
1468-0343
D.O.I.
10.1111/ecpo.12107
Publisher site
See Article on Publisher Site

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.

Journal

Economics & PoliticsWiley

Published: Jan 1, 2018

Keywords: ; ; ; ;

References

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