Search results

We develop a model of legislative decision making in which lobbying and public policy are jointly determined. We examine how policy outcomes depend on the sizes of the interest groups. While a larger size typically involves favorable effects on policy, we also identify threshold levels of interest-group size where a lobby will be harmed if it becomes larger. This may provide another rationale as to why some interests do not or not fully organize. Spending limits can remove adverse policy effects of interest-group size. However, this is not necessarily welfare improving. Moreover, we find that endogenous proposal making may turn a econd-mover advantage in standard legislative lobbying models into a second-mover disadvantage.

We examine lobby influence on policy outcomes in a legislative vote-buying model with two competing lobbyists and endogenous policy proposals. We compare two polar cases: (1) the committee or (2) the lobbyist seeking policy change writes the bill. Surprisingly we find that if the salience of the issue is low, the committee proposes more extreme policy changes than the pro-policy-change lobbyist even though the policy preferences of the committee are more moderate. The opposite is true if salience is high. We also show that the extreme proposals when salience is low do not necessarily involve lower welfare relative to the lobbyist's proposal.

We develop a model of legislative lobbying where policy proposals are endogenous. We show that a policy proposer with preferences tilted towards one lobby may be induced by an increase in that interest group's size to propose policies geared towards the opposing lobby. Hence, a larger lobby size can have adverse effects on policy outcomes for this same lobby. This provides another rationale as to why some interests do not organize. Moreover, we find that a second-mover advantage in Groseclose and Snyder (1996)-type lobbying models with exogenous policy proposals can turn into a second-mover disadvantage when the proposal is endogenous.

We develop a model of legislative lobbying where policy proposals are endogenous. We show that a policy proposer with preferences tilted towards one lobby may be induced by an increase in that interest group's size to propose policies geared towards the opposing lobby. Hence, a larger lobby size can have adverse effects on policy outcomes for this same lobby. This provides another rationale as to why some interests do not organize. Moreover, we find that a second-mover advantage in Groseclose and Snyder (1996)-type lobbying models with exogenous policy proposals can turn into a second-mover disadvantage when the proposal is endogenous.

Many decisions taken in legislatures or committees are subject to lobbying efforts. A seminal contribution to the literature on vote-buying is the legislative lobbying model pioneered by Groseclose and Snyder (1996), which predicts that lobbies will optimally form supermajorities in many cases. Providing the first empirical assessment of this prominent model, we test its central predictions in the laboratory. While the model assumes sequential moves, we relax this assumption in additional treatments with simultaneous moves. We find that lobbies buy supermajorities as predicted by the theory. Our results also provide supporting evidence for most comparative statics predictions of the legislative lobbying model with respect to lobbies' willingness to pay and legislators' preferences. Most of these results carry over to the simultaneous-move set-up but the predictive power of the model declines.

After most countries have harmonized intellectual property rights (IPR) legislation as a consequence of signing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the dispute about the optimal level of IPR-protection has shifted towards IPR-enforcement. This paper develops an endogenous growth framework with two open economies satisfying the classical North-South assumptions to study (a) the regions' incentives to enforce IPR in a decentralized game, (b) the desired IPR-enforcement of the two regions in negotiation rounds on global harmonization and (c) the constrained-efficient enforcement level. We show how the different solutions relate to each other and how the results depend on the research productivity in the North and the regions' relative market sizes. While growth rates substantially increase when IPR-enforcement is harmonized at the North's desired level, our numerical simulation suggests that the South may also benefit in terms of long-run welfare.

In this paper we study the incentives for basic-research investments by governments in a globalized world. For this purpose, we develop a two-country Schumpeterian growth model in which each country chooses its basic-research investments. We find that a country's basic-research investments increase with the country's level of human capital and decline with its own market size. This may explain the large basic-research investments by small open economies. Compared with the optimal investments achievable when countries coordinate their basic-research policies, a single country may over-invest in basic research. However, in the decentralized case the total amount of basic-research investments is always below the socially optimal investment level, which justifies policy coordination in this area.