Compaign spending with office-seeking politicians, rational voters, and multiple lobbies (Q1599832)

A microfounded model of campaign finance with office-seeking politicians, a continuum of voters, and a large number of heterogeneous lobbies is introduced. The model is used to: (1) determine the relation between campaign spending and the deviation from the median voter's preferred policy; (2) show the informational value of lobbies' contributions; (3) evaluate the welfare implications of restricting compaign spending; (4) interpret the empirical finding that campaign expenditures have a very low effect on election outcome.