Informational Lobbying and Counter-lobbying over Budgets

Abstract: We present a simple model of informational lobbying by competing interest groups. In the model, lobbying effort is costly and endogenous while information revelation is explicit and strategic. We examine the impact on lobbying expenditures of 1) partisan policy bias in the legislature, 2) differential party control over proposal power and veto power, and 3) two different budgetary institutions (annual and biannual budgeting). Many of the predictions are new to the literature. We then test the model’s predictions with lobbying expenditure data from 590 firms and unions operating in 12 states. The predicted patterns are clearly present in the data.