Lobbying for Government Appropriations

Abstract

This article investigates the effect of lobbying on government contract allocation. I consider how lobbying can affect both total contract spending and the distribution of contracts between firms. I solve a novel contest model which incorporates these two effects, and then structurally estimate it using a panel of federal contractors. The results suggest that lobbying increases contract spending by $8.7 billion (3.2%) per year. However, its effects on the observed contract distribution and firm revenues are relatively small.