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How a firm can induce legislators to adopt a bad policy

Dahm, Matthias; Dur, Robert; Glazer, Amihai

Authors

Matthias Dahm matthias.dahm@nottingham.ac.uk

Robert Dur

Amihai Glazer aglazer@uci.edu

Abstract

This paper shows why a majority of legislators may vote for a policy that benefits a firm but harms all legislators. The firm may induce legislators to support the policy by suggesting that it is more likely to invest in a district where voters or their representative support the policy. In equilibrium, no one vote may be decisive, so each legislator who seeks the firm’s investment votes for the policy, though all legislators would be better off if they all voted against the policy. And when votes reveal information about the district, the firm’s implicit promise or threat can be credible. Unlike influence mechanisms based on contributions or bribes, the behavior considered is time consistent and in line with the low campaign contributions by special interests.

Journal Article Type Article
Publication Date Apr 30, 2014
Journal Public Choice
Print ISSN 0048-5829
Electronic ISSN 1573-7101
Publisher Humana Press
Peer Reviewed Peer Reviewed
Volume 159
Issue 1-2
DOI https://doi.org/10.1007/s11127-012-0016-z
Keywords Lobbying, Voting, Special interests, Credibility
Publisher URL https://link.springer.com/journal/11127/159/1/page/1
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information The final publication is available at link.springer.com via http://dx.doi.org/10.1007/s11127-012-0016-z

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