In this Paper we explore to what extent secondary policy issues are influenced by electoral incentives. We develop a political agency model in which a politician decides on both a frontline policy issue, such as the level of public spending, and a secondary policy issue, such as environmental...

We study how rich shareholders can use their economic power to deregulate firms that they own, thus skewing the income distribution towards themselves. Agents differ in productivity and choose how much labor to supply. High productivity agents also own shares in the productive sector and thus...

An extensive literature has studied lobbying by special interest groups. We analyze a novel lobbying channel: lobbying businessmen-politicians through business proxies. When a politician controls a business, firms attempting to curry favors shift their spending towards the politician's business....

We re-address the tradeoff between centralized and decentralized decision making of local policies when policymakers are subject to capture by special interest groups. In particular, we consider the case where lobbies have private information about their ability to exert influence. We find a new...

We develop a model where trade agreements - in addition to correcting terms-of-trade externalities - help governments to commit vis-a-vis domestic industrial lobbies. We explore how trade liberalization is affected by the characteristics of the political environment, such as the degree to which...

Conventional wisdom suggests that lobbying is the preferred mean for exerting political influence in rich countries and corruption the preferred one in poor countries. Analyses of their joint effects are understandably rare. This paper provides a theoretical framework that focus on the...

We study political activism by several agents (lobbyists, unions, etc.) who have private but imperfect policy-relevant signals, and seek to influence the decisions of a policy maker. When agents can share information and coordinate their actions, the equilibrium is shown to be equivalent to that...

We study the effects of unequal representation in the interest-group system on the degree of information transmission between a lobbyist and a policy-maker. Employing a dynamic cheap-talk model in which the lobbyist cares instrumentally about his reputation for truth telling, we show that the...

Although the theoretical literature often uses lobbying and corruption synonymously, the empirical literature associates lobbying with the preferred mean for exerting influence in developed countries and corruption with the preferred one in developing countries. This paper challenges these...

We develop a model in which two firms that have proposed to merge are privately informed about merger-specific efficiencies. This enables the firms to influence the merger control procedure by strategically revealing their information to an antitrust authority. Although the information improves...