Introduction

This chapter considers the strategies, outcomes, short-term versus long-term consequences, and the social desirability of lobbying by examining in detail three lobbying models; each uses a two-stage model of interest groups lobbying the government to affect policies that in turn affect their welfare. Then, given the lobbying efforts, the government maximizes a governance function. There is a large existing literature on the subject of lobbying originating with Becker (1983, 1985), Bhagwati (1982), and Krueger (1974), among others.

The three models, Rausser and Foster (1990), Grossman and Helpman (1994, 1995, 2001), and Ball (1995), examined in this chapter are not meant to be an exhaustive list. These models are very different from each other. They arrive at different conclusions, and yet they all address lobbying. The Rausser and Foster (RF) and the Grossman and Helpman (GH) models include many interest groups who behave as Cournot competitors among themselves in the first stage. In contrast, in the Ball (B) model there is only one interest group and the government. The RF and the GH models recognize that the policy is formed in a process of bargaining among the organized groups and the government. Their models conform to the reciprocal power relation proposed by Harsanyi (1962b). Ball's model is simply a signaling game in which lobbying enables the interest group to credibly signal its true preferences to the government.