Policy-advising Competition and Endogenous LobbiesManuel Foerster
25 April 2024
Manuel Foerster (University of Bielefeld), 17:15 - 18:45, presents his project in the Interdisciplinary Research Seminar of the GRK "Collective Decision-Making”.
Location: Room 0079, Von-Melle-Park 5
Abstract (joint with Daniel Habermacher)
We present a general model of Bertrand competition between experts in a policy-advising market. A policy-maker can hire one of the experts or acquire information himself. We first characterize equilibria and show that an expert is never hired under centralization under a weak condition on the uncertainty about the environment. Second, competition reduces the costs of advice and may even cause an expert previously hired at a positive price to then engage in lobbying. Finally, hiring (competition from) a good expert may decrease social welfare if the policy issue is narrow and mainly concerns the policy-maker’s own voters.
Find the abstract as PDF here.