A model of Cournot competition with lobbying

Lobbying plays an integral part in American politics. This paper utilizes game theory to examine the optimal lobbying effort for a duopoly that is competing for a government contract. We first examine a model with a specific probability function and then discuss a model with a general probability function. We find that if the probability function is concave there exist a unique, stable equilibrium. Furthermore, total lobbying will increase with the size of the contract and the factor of corruption and is likely to decrease with an increase in one of the firm’s costs.