Lobbying dynamics
| Author | David P Baron |
| DOI | 10.1177/0951629819850630 |
| Published date | 01 July 2019 |
| Date | 01 July 2019 |
| Subject Matter | Articles |
Article
Journal of Theoretical Politics
2019, Vol.31(3) 403–452
ÓThe Author(s) 2019
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DOI: 10.1177/0951629819850630
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Lobbying dynamics
David P Baron
Stanford University, Graduate School ofBusiness, Stanford, CA, USA
Abstract
Many if not most government policies, regulations, and laws continue in effect unless changed by
the legislature, providing a natural dynamic to the political process. Lobbying is a ubiquitouscom-
ponent of that process and can affect both proposal making and voting. This paper characterizes
Markov perfect equilibriaof a dynamic legislative bargaining model with stable policies and durable
coalitions despite lobbying.Interest groups aligned with challenges to the incumbent coalitionhave
a greater willingness to pay thanhave the defending interest groups, but the defenders havea legis-
lative incumbency advantage in needing to counter-lobby fewer legislators than the challengers
lobby. Iflegislators are sufficiently patient, equilibria exist such that thedefenders of the incumbent
coalition are successful. Morethan a minimal majority may be lobbied by the challengers, and coa-
litions can be surplus. Lobbyingcan increase proposal power, resulting in a more unequal distribu-
tion within a coalition.
Keywords
Coalitions; dynamics; legislative bargaining; lobbying
1. Introduction
Two ubiquitous features of public lawmaking are policies that continue until chan-
ged and lobbying to influence the choice and content of those policies. Many if not
most government policies remain in effect until changed by new legislation. Policies
governing taxes, trade, the environment, health care including Medicaid, Medicare,
and Obamacare, education, social security, and entitlements continue from legisla-
tive term to legislative term. Regulations promulgated by regulatory commissions
and government agencies are also continuing. Government spending programs are
also largely continuing despite required annual appropriations. Not only are
Corresponding author:
David P Baron, GraduateSchool of Business, Stanford University, 655 Knight Way, Stanford, CA 94305,USA.
Email: dbaron@stanford.edu
policies continuing, but many are stable, remaining in effect for extended periods
of time despite efforts to change them. Lobbying is one explanation for some long-
lived, stable policies. Lobbying arises from a constitutional right to petition govern-
ment and occurs when collective action problems can be overcome and interests
can organize for political action. Many interest groups lobby, including firms, trade
and professional associations, unions, environmental and other non-governmental
organizations (NGOs), universities, farm organizations, and so on. Some interest
groups lobby directly, some hire commercial lobbyists, and others lobby through
associations and coalitions.
1,2
In 2017 there were 11,529 registered lobbyists in the
United States with revenue of US$3.37 billion (opensecrtes.org, accessed July 7,
2018), and others lobby who are not required to register. Legislators benefit from
lobbying, and they would be expected to encourage it.
This paper considers lobbying by interest groups that have opposing preferences
and compete by supporting policy alternatives from which they benefit. Policies
are endogenous and chosen in a majority rule legislature, continue in effect until
changed, and in an equilibrium are sustained against present and future challenges.
Legislators can challenge an incumbent coalition and its policy by proposing an
alternative policy. If there is a challenge, interest groups lobby to support the alter-
native policy or to support the incumbent policy. The objective of this paper is to
identify coalitions that are durable and policies that are stable over time and to
characterize the lobbying that supports and challenges those policies and coali-
tions. Lobbying observed in an equilibrium is defensive and successful, and which
policies are supported in an equilibrium depends on the lobbying.
Lobbying refers to the provision of politically valuable resources to legislators
and is to be interpreted more broadly than campaign contributions and the activi-
ties of registered lobbyists. Lobbying can take a variety of forms ranging from
bribes in the case of FIFA to helping build support among constituents of members
of Congress. Lobbying includes endorsements as by environmental NGOs such as
the Sierra Club, staffing of phone banks, campaign contributions, soft-money cam-
paign contributions, research to develop information on the effect of policy alterna-
tives on constituents, and donations to causes of interest to a legislator. Politically
valuable resources also include a legislative subsidy (Hall and Deardorf, 2006)
where lobbyists do some of the work of legislators to advance their own objectives.
Lobbying as an influence activity can also be indirect. In California interest groups,
including a tribal casino, an insurance company, and a pharmaceutical company,
made behested payments to non-governmental causes personally supported by the
governor, and private donors and an environmental group paid for his trip to a
UN climate change conference.
Lobbying requires access to time-constrained officeholders, and access can be
provided through personal relationships, campaign contributions, or a constitu-
ency connection as an alternative to hiring a commercial lobbyist with connections.
In 2015 the contested reauthorization of the Export–Import Bank jeopardized
funding for exporters including Boeing, which threatened to move some produc-
tion from the United States to Europe where government financing was available.
The potential loss of jobs provided a strong incentive for affected members of
404 Journal of Theoretical Politics 31(3)
Congress to support reauthorization. Boeing was in effect lobbying with the jobs
of constituents.
Groseclose and Snyder (1996) recognized the dynamic nature of lobbying com-
petition. They stated (p. 304),
‘‘suppose an organized interest group builds a legislative coalition to pass a bill in one
session of the legislature and must maintain the coalition in subsequent sessions, when
groups that oppose the bill may have the opportunity to counterattack and try to rescind
it. Then the group supporting the policy effectively moves first, and in building its coali-
tion it should defend against a wide range of possible attacks.’’
This paper considers the dynamics of lobbying with a focus on coalitions and poli-
cies that withstand all such challenges.
With policies that continue from one period to the next, interest groups that
support the incumbent coalition and its policy have no reason to lobby unless there
is a challenge, so it is natural to model lobbying as sequential. Lobbying competi-
tion then takes the form of a winner pays auction rather than a menu auction as in
Grossman and Helpman (1994) or an all-pay auction as in Baye et al. (1993), both
of which involve simultaneous actions.
In the model in each period a legislature allocates benefits among legislative dis-
tricts, and interest groups benefit from the allocation to their district, which pro-
vides the incentive to lobby. The lobbying provides politically valuable resources to
legislators but not to constituents. The lobbying directly influences voting on the
agenda, and agenda setting anticipates that lobbying. The interest groups are rivals,
but subsets of them have a common interest is supporting or defeating the status
quo.
As in Groseclose and Snyder (1996, 2000) and Banks (2000), lobbying involves
bidding up until the budget of either the challenging or defending interest groups is
exhausted. In contrast to Groseclose and Snyder (1996, 2000) where policy alterna-
tives and lobbying budgets are exogenous, both are endogenous here. The interest
groups supporting the challenge choose the breadth and intensity of their lobbying,
and their lobbying induces counter-lobbying by the interest groups supporting the
incumbent coalition and its policy. To prevent the challenging interest groups from
concentrating their lobbying on coalition partners with the weakest incentives to
remain in the coalition, formateurs equalize the reservation values of their coalition
partners.
Preferences for coalition size, the breadth and intensity of lobbying by challen-
gers, and the counter-lobbying by the defenders of the incumbent policy depend on
the majority requirement in the legislature, and the challenging interest groups can
choose to lobby more than a minimal majority of legislators. In Groseclose and
Snyder (1996) the challenging interest groups make the votes of every decisive set
of legislators equally costly to the defending interest groups, and this leveling prop-
erty is also a feature of the equilibria considered here. Formateurs anticipate this
lobbying, which affects the policies they propose and the coalitions they form.
Baron 405
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