Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72360
Authors: 
Pastine, Ivan
Pastine, Tuvana
Year of Publication: 
2006
Series/Report no.: 
Working Paper Series, UCD Centre for Economic Research 06/19
Abstract: 
This paper extends Che and Gale (1998) by allowing the incumbent politician to have a preference for the policy position of one of the lobbyists. The effect of a contribution cap is analyzed where two lobbyists contest for a political prize. The cap always helps the lobbyist whose policy position is preferred by the politician no matter whether it is the high-valuation or the low-valuation contestant. In contrast to Che and Gale, once the cap is binding a more restrictive cap always reduces expected aggregate contributions. However, the politician might support the legislation of a barely binding cap. When politician policy preferences perfectly reflect the will of the people, a more restrictive cap is always welfare increasing. When lobbyist’s valuations completely internalize all social costs and benefits, a cap is welfare improving if and only if the politician favors the high-value policy. Even a barely binding cap can have significant welfare consequences.
Subjects: 
All-pay auction
campaign finance reform
explicit ceiling
JEL: 
D72
C72
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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