A Model Of Cournot Competition With Lobbying

Abstract

Lobbyingplays an integral part in the American political process. This paper utilizesgame theory to examine the lobbying efforts of a duopoly that is competing fora government contract. We first examine a model with a general probabilityfunction and then solve a model with a specific probability function. We findthat if the probability function is concave, then there exists a globally-stableNash-Cournot equilibrium. Furthermore, total lobbying will increase with thesize of the contract and the ease in which policymakers can be influenced andis likely to decrease with an increase in one of the firm’s costs.