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Abstract
This paper models information transmission in an electoral campaign. The voters have conflicting policy interests, but they are congruent in their desire to elect a competent politician. They hold private information about the candidates for office, and they use endorsements and campaign contributions to signal their information, so as to advertise their most preferred candidates. Endorsements are cheap talk, but campaign contributions are costly, hence, contributions are stronger signals than endorsements. Therefore, contributions help to transmit information when voter interests are relatively divergent (however, not so much that campaigning is useless).

This article examines the influence of campaign contributions on agricultural subsidies. Empirical results revealed that rent‐seeking works, i.e. contributions, influence agricultural subsidies in the manner they best serve contributors' economic interests. Eliminating campaign contributions would significantly decrease agricultural subsidies, hurt farm groups, benefit consumers and taxpayers, and increase social welfare by approximately $5.5 billion. Although contributions are not the only determinants of agricultural subsidies, investment returns to farm PAC contributors are quite high ($1 in contributions brings about $2,000 in policy transfers). In fact, the results are in sharp contrast to the "truthful contributions" assumption of the Grossman–Helpman model.

Many states select judges using competitive elections. Proponents of appointment plans contend that judicial candidates may be tempted to grant favors to lawyers who donate to their campaigns, thus compromising the independence of the judiciary. I contend that previous studies have failed to rigorously test the hypothesis that campaign contributions directly affect judicial decision-making. Using data from the 1998 term of the Wisconsin Supreme Court, I show that lawyers who make campaign contributions are no more likely to win cases than lawyers who do not. Furthermore, the data show that judges who are faced by lawyers who contributed large amounts to their campaigns are more likely to recuse themselves.

We analyze contributor behavior when there are two types of voters: positioned voters, who care about the ideological positions of candidates, and swing voters, who care about only the leadership abilities of candidates. Campaign expenditures, which are funded by contributions, are assumed to influence voters' perceptions of a candidate's ability. We find that the number of swing voters may have unexpected consequences on equilibrium campaign contributions. In particular, total contributions may increase as the number of swing voters decreases.Elections are won by doing two things: mobilizing your base and winning the independent swing voters.(Karl Rove, campaign strategist for George W. Bush)

This paper presents a theoretical model of political competition that can explain the positive correlation between money spent by a political party on the election campaign and the number of votes received. The model does not assume that money can be used to fool voters or to buy votes. It shows that such correlation arises because of the existence of unobservable factors that affect both campaign spending and the result of the campaign. It analyzes how wealth inequality among political parties and the costs of information dissemination affect the choice of political platforms and amounts of money spent by each party and shows that all parties have incentives to spend money on the election campaign.

There is a vast empirical literature on the allocation of corporate PAC contributions in Congressional elections and the influence that these contributions have on the policy-making process. The attention given to PAC contributions is far in excess of their actual importance. Corporate PAC contributions account for about 10% of Congressional campaign spending and major corporations allocate far more money to lobbying or philanthropy than their affiliated PACs make in contributions.

This manuscript version is made available under the CC-BY-NC-ND 4.0 license: http://creativecommons.org/licenses/by-nc-nd/4.0/ which permits use, distribution and reproduction in any medium, provided the original work is properly cited. This author accepted manuscript is made available following 24 month embargo from date of publication (May 2018) in accordance with the publisher's archiving policy ; This paper studies the effect of lobby groups on electoral competition and equilibrium policy outcomes employing a 'money for policy favours' model of lobbying. Our results show that when a lobby group seeks to influence an electoral outcome, it will make a financial contribution to only one political party whose policy is closely aligned to its own ideal policy. When misappropriation of campaign funds occurs, political parties that divert more funds for personal gain stand on more independent platforms and require larger contributions from lobby groups. Greater electoral competition could reduce policy distortions but this, in turn, sparks more intense lobbying thereby increasing the scope of misappropriation of funds. In the case of multiple lobbying, political parties either demand different levels of campaign contributions or leave them with different levels of satisfaction. ; This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors.