Working Paper: CEPR ID: DP3174
Authors: Leonardo Felli; Antonio Merlo
Abstract: In this paper, we present a citizen-candidate model of representative democracy with endogenous lobbying. We find that lobbying induces policy compromise and always affects equilibrium policy outcomes. In particular, even though the policy preferences of lobbies are relatively extreme, lobbying biases the outcome of the political process toward the center of the policy space, and extreme policies cannot emerge in equilibrium. Moreover, in equilibrium, not all lobbies participate in the policy-making process.
Keywords: citizen-candidate model; endogenous lobbying; representative democracy
JEL Codes: D72; D74; D78
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lobbying (D72) | policy compromise (D78) |
| elected candidate selects lobbies (D72) | lobbying (D72) |
| lobbying (D72) | moderate policy outcomes (E65) |
| lobbying biases outcomes toward center (D72) | policy outcomes (D78) |