Lobbying-consistent Delegation and Sequential Policy Making

This paper studies the relationship between interest group political influence and allocation of decisionmaking power in a potentially divided government. We consider a simple endogenous policy model in which a legislator is in charge of setting the levels of two different policy instruments - a tax rate and a revenue redistribution scheme - and may decide to delegate policy authority over the allocation task to a bureaucracy within a hierarchy. An organized group is able to influence the political process at both tiers through the provision of policy-contingent contributions. We find conditions under which legislative delegation and sequential decisionmaking are consistent in equilibrium with the presence of two-tier lobbying, as the effects of the former on the allocation of lobbying activities exactly counterbalance the loss from bureaucracy's capture. As a consequence, we find that the possibility of multi-tier lobbying within a divided government need not be harmful to the higher level policy maker in the political equilibrium.