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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/57959
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| Title: | | How a firm can induce legislators to adopt a bad policy  |
| Authors: | | Dahm, Matthias Dur, Robert Glazer, Amihai |
| Issue Date: | | 2012 |
| Series/Report no.: | | CESifo working paper: Public Choice 3788 |
| Abstract: | | This paper shows why a majority of legislators may vote for a policy that benefits a firm but harms all legislators. The firm may induce legislators to support the policy by suggesting that it is more likely to invest in a district whose voters or representative support the policy. In equilibrium, no one vote may be decisive, so each legislator who seeks the firm's investment votes for the policy, though all legislators would be better off if they all voted against the policy. Moreover, when votes reveal information about the district, the firm's implicit promise or threat can be credible. Unlike influence mechanisms based on contributions or bribes, the behavior considered is time consistent and in line with the observed small spending by special interests. |
| Subjects: | | lobbying voting special interests credibility |
| JEL: | | D72 D78 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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