Information transmission and ine¢ cient lobbying

  • Rafael Costa Limay, Humberto Moreiraz
  • Published 2008

Abstract

In a seminal paper, Grossman and Helpman (1994) introduced a framework to understand how lobbying activities in‡uence the choice of import/export tari¤s. Although their analysis presumes perfect information, in many situations lobbies are privately informed on the impact of the policies available to the governments. In this paper we assume that the competitiveness of producers are lobbies’private information in a Grossman and Helpman’s lobby game. In particular, this allows us to analyze the e¤ects of information transmission within their model. We show that the information transmission generates two informational asymmetry problems in the political game. One refers to the cost of signaling the lobby’s competitiveness to the policy maker and the other to the cost of screening the rival lobby’s competitiveness from the policy maker. As an important consequence information transmission may improve welfare through the reduction of harmful lobbying activity. Keywords: lobby; asymmetric information; common agency; political economy. JEL Classi…cation: D82; D72. We thank CNPq of Brazil for …nancial support. yPh.D. candidate at The Graduate School of Economics of Fundação Getulio Vargas. zFundação Getulio Vargas.

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Cite this paper

@inproceedings{Limay2008InformationTA, title={Information transmission and ine¢ cient lobbying}, author={Rafael Costa Limay and Humberto Moreiraz}, year={2008} }