Date of Original Version
© The Author 2015. This article has been accepted for publication in Review of Economic Studies published by Oxford University Press.
Abstract or Description
Firms lobby the U.S. Congress to influence policy-making. This paper quantifies the extent to which lobbying expenditures affect policy enactment. First, I construct a novel dataset comprised of federal energy legislation and lobbying activities by the energy sector during the 110th Congress. Second, I develop and estimate a game- theoretic model where heterogeneous players choose lobbying expenditures to affect the probability that a policy is enacted. I find that the effect of lobbying expenditures on a policy's equilibrium enactment probability is very small. However, the average returns from lobbying expenditures are estimated to be over 140%.
Review of Economic Studies, forthcoming.