The Polarization Effect of Monopsonistic Lobbying

TL;DR

This paper introduces a non-electoral lobbying model where monopsonistic market dynamics lead to political polarization, showing that platform differentiation can emerge purely from lobbying structures without electoral influences.

Contribution

It presents a novel non-electoral mechanism explaining polarization through monopsonistic lobbying markets, independent of traditional electoral incentives.

Findings

Equilibrium positions politicians at (1/4, 3/4) for any monotone cost.

Polarization arises solely from lobbying market structure.

Platform differentiation is driven by rent gradients in lobbying.

Abstract

Classical spatial models predict platform convergence, yet empirical polarization persists. This paper proposes a non-electoral mechanism: lobbying as a monopsonistic market for legislative support. Here, extreme benefactors must pay more to attract distant politicians, creating a rent gradient that rewards platform differentiation. We find that the unique equilibrium places politicians at $(\frac{1}{4},\frac{3}{4})$ for any monotone policy-production cost. Thus, polarization can arise solely from lobbying-market structure, independent of electoral incentives.