Were you naughty or nice? An Impartial Theory of the Effects of Lobbyism.

Theo Simon (University of Siegen)
Nils Goldschmidt (University Siegen)


Lobbyism is often judged prematurely. Both, those in favor of and those against lobbyism, tend to implicitly judge lobbyism ex ante. We hypothesize that these polarized viewpoints can also be found in the academic literature. Specifically, we hypothesize that existing economic theories of methods of lobbying come with a connotation of the welfare effects of lobbyism because of the assumptions made. We argue that there is a lack of theory describing the effects of lobbyism without implicitly pointing in one direction of the resulting welfare effect. That becomes problematic when analyzing specific cases of lobbyism. It remains unclear if the lobbying effort itself leads to certain welfare effects or if these are identified because of the assumptions made by the theory used. We solve this problem by developing a theoretical framework that describes lobbyism as a process of shaping transaction costs. It is not clear per se, if changes of transaction costs lead to positive or negative welfare effects. We exemplify our theory with two channels of lobbyism; information and contribution. Thereby, we contradict the intuition that society profits from lobbies providing information to politicians and suffers from lobbies providing contributions to politicians. Further, we sketch out how problematic lobbyism can be identified and regulated based on our theory.

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