The Informational Effects Of Competition And Collusion In Legislative Politics

The authors use a mechanism design approach to study the organization of interest groups in an informational model of lobbying. Interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers. Interest groups have private information on their ideal points in a one-dimensional policy space and may either compete or adopt more collusive behaviors. Optimal policies result from a trade-o¤between imposing rules which are non-responsive to the groups' preferences and flexibility that pleases groups better.