I introduce a microfounded model of campaign finance with office-seeking politicians, a continuum of voters, and a large number of heterogeneous lobbies. Lobbies make contributions to politicians according to a common agency framework.
Politicians use contributions to finance their electoral expenditures.
One can say that this model makes the best case in favor of campaign contributions. Nevertheless, under reasonable parameter values, a ban on campaign contributions is welfare-improving. Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 123. If you experience problems downloading a file check if you have the proper application to view it first. Information about this may be contained in the File-Format links below.