Essays on lobbying and corruption

The research presented here contributes to our understanding of the lobbying process, and presents implications relevant for the design of regulations and the normative debate on lobbying. Chapter 1 considers the effects of regulatory caps on contributions to political campaigns. I show that contribution caps may not improve welfare even if the main function of contributions is to buy policy favors for special interests. In my model, limited lobbying budgets give rise to a political equilibrium with inefficient public policies. Imposing a contribution cap necessarily restores efficiency only if lobbying costs are zero and budgets are fixed exogenously. With positive costs and endogenous budgets, contribution caps may yield even worse policies than the status quo. Moreover, even if better policies are chosen, the resulting gain in welfare may be more than offset by increased expenditures on political organization. In Chapter 2, Per Fredriksson and I investigate how domestic political institutions and interest group pressures jointly determine the probability that a country ratifies an international environmental agreement. In our model, government veto players (such as the legislative chambers or the president) are offered political contributions from environmental and industry lobby groups. The model suggests an asymmetry in the impact of political institutions on lobby groups. Institutional arrangements with a greater number of veto players reduce the positive impact of environmental lobbying on ratification. Such institutional features have ambiguous effects on industry lobbying, however. We test these predictions using Logit and hazard models, and panel data from 170 countries on the timing of Kyoto Protocol ratification. In Chapter 3, Dilyan Donchev and I present empirical evidence that the most widely used indices to measure corruption might be biased in systematic ways. Evidence from the International Crime Victimization Survey suggests that actual corruption experience may be a weak predictor of reported corruption perception, and that some of the factors commonly found to "reduce" corruption, such as economic development, democratic institutions or Protestant traditions, systematically bias corruption perception downward from corruption experience. Individual characteristics, such as age, education, income and place of residence, are also shown to influence corruption perceptions holding experience constant.