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Allocating Lobbying Resources between Collective and Private Rents

University of North Carolina, Charlotte

Edward J. Lopez

San Jose State University, California

Barry J. Seldon

University of Texas-Dallas

How do firms allocate their lobbying resources among their political goals? The authors approach this question using a game-theoretic model that integrates three concepts from the lobbying literature: the distinction between private and collective rents, the competition for a rent, and the impacts of political institutions. The model indicates how competition and political institutions affect lobbying expenditures and expected net returns for private and collective lobbying. The outcomes predicted differ with those of past formal models and produce the counterintuitive expectation that competition typically reduces expenditures. The authors test the model's predictions by examining the lobbying decisions of sixty-two firms.

Key Words: lobbying • rent-seeking • private goods • collective goods • competition • institutional friction • policy makers' costs • collective action

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