Interest Groups Incentives to Cooperate in the Production of Information in the Context of the EU Policy-Making

Abstract

[Abstract] The literature on information economics serves the European Commission to justify the participation of interest groups in response to problems of asymmetric information in the European Union (EU) policy-making processes. Using the framework of the agency theory, the role of interest groups as information producers is incorporated into a model where the types of conditions in which they would have the incentive to cooperate in the production of information are examined. The results of the model show that the interest group’s expected utility when acting independently is equal to the reserve utility, while it increases when acting cooperatively. It can therefore be concluded that incentives for cooperation in the production of information among interest groups exist. One potential policy implication for the EU is that the EC could decrease the conditions of the contracts, thereby diminishing the costs of obtaining information.