Pastine, IvanIvanPastinePastine, TuvanaTuvanaPastine2008-12-032008-12-032006 Schoo2006-11200619http://hdl.handle.net/10197/700This paper extends Che and Gale (1998) by allowing the incumbent politician to have a preference for the policy position of one of the lobbyists. The effect of a contribution cap is analyzed where two lobbyists contest for a political prize. The cap always helps the lobbyist whose policy position is preferred by the politician no matter whether it is the high-valuation or the low-valuation contestant. In contrast to Che and Gale, once the cap is binding a more restrictive cap always reduces expected aggregate contributions. However, the politician might support the legislation of a barely binding cap. When politician policy preferences perfectly reflect the will of the people, a more restrictive cap is always welfare increasing. When lobbyist’s valuations completely internalize all social costs and benefits, a cap is welfare improving if and only if the politician favors the high-value policy. Even a barely binding cap can have significant welfare consequences.2543997 bytesapplication/pdfenAll-pay auctionCampaign finance reformExplicit ceilingD72C72Political campaigns--Mathematical modelsCampaign fundsNoncooperative games (Mathematics)Working Paperhttps://creativecommons.org/licenses/by-nc-sa/1.0/