If You Cannot Get Your Friends Elected, Lobby Your Enemies

We incorporate campaign contributions in the citizen-candidate model of representative democracy with endogenous lobbying of Felli and Merlo (2006). In equilibrium, lobbies contribute to the electoral campaign of candidates whose policy preferences are aligned with their own. In the event that their preferred candidate does not win the election, lobbies also transfer resources to elected politicians with opposed preferences to induce policy compromise. On the other hand, lobbies never make post electoral transfers to winning candidates whose electoral campaign they supported. (c) 2007 by the European Economic Association.