Firms lobby the U.S. Congress to inuence policy-making. This paper quanties the extent to which lobbying expenditures aect policy enactment. First, I construct a novel dataset comprised of federal energy legislation and lobbying activities by the energy sector during the 110th Congress. Second, I develop and estimate a gametheoretic model where heterogeneous players choose lobbying expenditures to aect the probability that a policy is enacted. I nd that the eect of lobbying expenditures on a policy's equilibrium enactment probability is very small. However, the average returns from lobbying expenditures are estimated to be over 140%.
Government procurement contracts rarely have many bids, often only one. Motivated by the institutional features of federal procurement, this paper develops a principal-agent model where a buyer seeks sellers at a cost and negotiates contract terms with them. The model is identified and estimated with data on IT and telecommunications contracts. We find the benefits of drawing additional sellers are significantly reduced because the procurement agency can extract informational rents from sellers. Another factor explaining the small number of bids is that sellers are relatively homogeneous, conditional on observed project attributes. Administrative hurdles and corruption appear to play very limited roles.
Lobbyists are omnipresent in the policymaking process, but the value that they bring to both clients and politicians remains poorly understood. We develop a model in which a lobbyist's value derives from his ability to selectively screen which clients he brings to a politician, thereby earning the politician's trust and preferential treatment for his clients. Lobbyists face a dilemma, as their ability to screen also increases their value to special interests, and the prices they can charge. A lobbyist's profit motive undermines his ability to solve this dilemma, but an interest in policy outcomes-due either to a political ideology or a personal connection-enhances it, which paradoxically increases his profits. Using a unique dataset from reports mandated by the Foreign Agents Registration Act, we find that lobbyists become more selective when they are more ideologically aligned with politicians, consistent with our prediction.
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