THE DYNAMICS OF LOBBYING - A DIFFERENTIAL GAME

This paper presents a dynamic model on lobbying. The interactions betw een two competing lobbies, who attempt to influence regulations and le gislation, are modelled as a differential game. We consider for this g ame first a time consistent and then a subgame perfect equilibrium (in linear Markov strategies). The subgame perfect equilibrium lowers con siderably lobbying activity and expenses. This provides a partial expl anation of the puzzle that rent-seeking expenses are often small compa red with the prize sought.