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Title: The informational effects of competition and collusion in legislative politics
Authors: Martimort, D.
Semenov, A. 
Keywords: Coalition
Communication mechanisms
Legislative politics
Issue Date: Jul-2008
Citation: Martimort, D., Semenov, A. (2008-07). The informational effects of competition and collusion in legislative politics. Journal of Public Economics 92 (7) : 1541-1563. ScholarBank@NUS Repository.
Abstract: We use a mechanism design approach to study the organization of interest groups in an informational model of lobbying. Interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers. Interest groups have private information on their ideal points in a one-dimensional policy space and may either compete or adopt more collusive behaviors. Optimal policies result from a trade-off between imposing rules which are non-responsive to the groups' preferences and flexibility that pleases groups better. Within a strong coalition, interest groups credibly share information which facilitates communication of their joint interests, helps screening by the legislature and induces flexible policies responsive to the groups' joint interests (an informativeness effect). Competing interest groups better transmit information on their individual preferences (a screening effect). The socially and privately optimal organization of lobbying favors competition between groups only when their preferences are not too congruent with those of the legislature. With more congruence, a strong coalition is preferred. Finally, within a weak coalition, interest groups must design incentive compatible collusive mechanisms to share information. Such weak coalitions are always inefficient. © 2008.
Source Title: Journal of Public Economics
ISSN: 00472727
DOI: 10.1016/j.jpubeco.2008.02.008
Appears in Collections:Staff Publications

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