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2010 | OriginalPaper | Chapter

4. Committees and Lobby Coalition Formation

Author : Dr. Nicola F. Maaser

Published in: Decision-Making in Committees

Publisher: Springer Berlin Heidelberg

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Abstract

This chapter finally descends from the heights of constitutional design to the domain of ‘ordinary’ politics: It analyzes a situation where lobbyists seek to influence decision-making in a legislature (or legislative committee) by offering payments to its members. While Chap. 1 has asked “who gets what” with respect to committee members themselves, Chaps. 2 and 3 have studied individual citizens’ ‘derivative’ influence on decisions in a committee of representatives. The present chapter considers the question how much clout lobbyists have with a legislative committee.

Lobbyists are assumed to share common interests with respect to the political outcome, whereby lobbying efforts become a public good for them, and incentives to free-ride arise. Each lobbyist prefers someone else to contribute so that he may enjoy the benefits from a more favorable political decision without incurring the costs of bringing it about. Although increasing returns to sharing these costs exist, which would imply the formation of a ‘grand coalition’ of lobbyists, “The Logic of Collective Action” (Olson, 1965) suggests that, in the absence of enforceable agreements, (rational) individual lobbyists cannot be expected to act on group interest, that is, to provide an efficient level of lobbying efforts. At the same time, in the real world, lobbyists often seem able to organize themselves in order to obtain changes in legislation or regulation.

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previous chapter Robust Equal Representation

Coalition formation among organized interests in the US has, however, been studied empirically by Hojnacki (1997). With respect to the EU, Pijnenburg (1998) presents a case study on the formation of ad hoc lobby coalitions of companies.

The reasons commonly cited to explain their perceived ineffectiveness are internal heterogeneity and difficulties in forming a common position (Pijnenburg, 1998; Michalowitz, 2004, p. 124).

The institutionalized consultation of group interests is seen as related to corporatist ideas prevailing in EU policy-making (see Michalowitz, 2004, p. 27). Yet, associations do not sit at the table when decisions are actually made, and inclusion of their suggestions is only rarely obligatory.

Of course, collective action problems inside these groups or companies may exist. These are assumed to already have been resolved in the present analysis.

A valuation is a mapping which associates to each coalition structure π a vector in \({\mathbb{R}}^{n}\), representing individual payoffs. A player’s valuation of a certain coalition thus depends on the entire coalition structure. Hart and Kurz (1983, 1984) refer to the evaluation of players’ prospects for any coalition structure as the coalition structure value.

In Snyder’s (1991) model, a single lobbyist (or a unitary lobby group) has full agenda-setting power, and there is a continuum of legislators.

How close exactly depends on how easily the agenda-setter is influenced, and how many members the legislature (and thus the lobby coalition) has.

Napel and Widgrén (2004) use the above legislative bargaining model in order to propose a new index of decision power which takes players’ spatial preferences into account (cf. Sect. 1.2.3).

The ‘costs’ that members of the legislature incur when deviating from their ideal point could, e.g., be moral qualms, or reduced chances of reelection if constituents can monitor voting records, and hold legislators accountable for their votes.

A different kind of offers are ‘pivotal contracts’, that are contingent on the collective decision. Here, a legislator receives a bribe if and only if his vote turns out to be pivotal to the collective decision that the lobbyist seeks to bring about. As discussed by Dal Bó (2007), pivotal contracts allow the outside party to manipulate committee decisions at no cost.

One might also consider a more general utility function \({v}_{j}(x,{C}_{j}) = -{\theta }_{j}{(x - L)}^{2} - {C}_{j}\), where θ_j > 0 varies across lobbyists. The assumptions of quadratic utility for the lobbyists and linear utility for the members of the legislative body simplify the analysis, but they are not essential to the qualitative results.

The game Γ, as well as the game Δ in Hart and Kurz (1983, 1984), are also called exclusive membership games of coalition formation (Bloch, 1997). Membership is exclusive because players are not free to join an existing coalition without the consent of its members.

By contrast, in the related game Δ, also studied by Hart and Kurz (1983, 1984), a coalition is formed of all members who announce a given coalition, irrespective of whether all members of that coalition announce it.

To allow for a valuation representation, it is necessary that the second-stage game has a unique equilibrium. As shown in Sect. 4.3.3, this is indeed the case.

Put differently, a symmetric game is invariant under a permutation of players.

Belleflamme (2000) imposes the restriction that maximally two coalitions can form in order to make progress on the analysis of cartel formation among asymmetric firms.

The general possibility that some lobbyist with an index number smaller than M could step into the breach and bring his legislator to vote in favor of the proposal is ignored in the analysis that follows. The focus is on least-cost lobbying strategies as described by (4.6).

Thus, k as a function of x depends on the particular profile of legislators’ ideal points. In the limiting case where legislators form a continuum with uniformly distributed ideal points on X, the policy that balances at the margin the gains in terms of policy and the costs of lobbying can be calculated explicitly and is given by \({x}^{{_\ast}} = (4nL + 2b{\lambda }_{M} - bQ - 2a)/(4n + b)\).

Kakutani’s fixed point theorem states the existence of a fixed point of f : A ⇉ A under the conditions that (a) \(A \subset {\mathbb{R}}^{n}\) is a nonempty, compact, convex set, and (b) f is an upper hemicontinuous correspondence from A into itself with the property that the set f(x) ⊂ A is nonempty and convex for every x ∈ A.

As the equilibrium coalition structure depends on the entire profile of ideal points, the location of the status quo, and parameters a and b, it is difficult to characterize in a general way. Conditions on the parameters could possibly be derived under some restrictions, such as, e.g., equidistant ideal points of all legislators.

‘A priori’, i.e., without taking preferences into account, the pivotal position would be a random variable. Under the condition that the ideal points \({\lambda }_{1},\ldots ,{\lambda }_{n}\) are independently and identically distributed, the a priori probability that a legislator is pivotal is given by the respective Shapley–Shubik index (cf. Sect. 1.2).

To the extent that a positive relationship exists between the degree of collusion in an industry and the similarity of firms’ preferences over policy outcomes, this result is in line with Damania and Fredriksson (2000) who show formally that more collusive industries with higher profits from collusion have a greater incentive to form industry lobby groups, and more easily overcome the free-rider problems involved.

The situation of two competing lobbyists is studied by Groseclose and Snyder (1996).

Different players might, however, use different rules, leading to incompatible expectations when it comes to bargaining over the actual allocation.

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Title: Committees and Lobby Coalition Formation
Author: Dr. Nicola F. Maaser
Publisher: Springer Berlin Heidelberg
Book: Decision-Making in Committees
Print ISBN: 978-3-642-04152-5

Electronic ISBN: 978-3-642-04153-2

Copyright Year: 2010
DOI: https://doi.org/10.1007/978-3-642-04153-2_4