American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Centralized Decision Making and Informed Lobbying
American Economic Journal: Microeconomics
vol. 9,
no. 4, November 2017
(pp. 324–55)
Abstract
We address the trade-off between centralized and decentralized decision making subject to influence from privately informed lobbies. We focus on informative equilibria with separating differentiable contribution schedules and identify an information transmission effect under centralized structures. Such effect decreases capture and increases welfare when lobbies have "aligned preferences." The opposite effect holds for "polarized preferences." We present two examples of this framework: local public goods and customs union agreements. Finally, we compare the policy outcomes from this political economy perspective to those under a normative mechanism design approach, and extend our analysis to the discussion of pooling equilibria.Citation
Lima, Rafael Costa, Humberto Moreira, and Thierry Verdier. 2017. "Centralized Decision Making and Informed Lobbying." American Economic Journal: Microeconomics, 9 (4): 324–55. DOI: 10.1257/mic.20150253Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 Asymmetric and Private Information; Mechanism Design
- F13 Trade Policy; International Trade Organizations
- F15 Economic Integration
- H41 Public Goods
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