Some Simple Microeconomics of Influence Markets

Abstract

In this paper, we explore the main consequences of monopoly and monopsony pricing in influence markets in which quid-pro-quo exchanges take place. Unlike existing models on resource-centred lobbying, which rely on menu auctions or bargaining theory, we use a partial equilibrium approach to determine equilibrium solutions with both perfect and absent market competition. As our results illustrate, such a microeconomic approach poses several interesting issues for both theoretical and empirical research on lobbying.