Product Market Competition and Lobbying Coordination in the U.S. Mobile Telecommunications Industry (original) (raw)
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Market Conduct and Endogenous Lobbying: Evidence from the U.S. Mobile Telecommunications Industry
Journal of Industry, Competition and Trade, 2007
This paper empirically explores the relationship between firms' market behavior and their lobbying activities in a regulated market. In particular, we investigate whether the amount of contributions offered by cellular service providers to fund the campaigns of political parties affected market conduct in the early US mobile telecommunications industry. We structurally estimate market interactions while taking the potential endogeneity of lobbying decisions into account. Our results show that competition was more intense in those states where campaign contributions by the cellular industry have been higher. Furthermore, we reject the hypothesis that lobbying activities can be regarded as exogenous in the study of market conduct.
The Market for Legislative Influence over Regulatory Policy
Advances in Strategic Management, 2016
We show that in the US telecommunications industry market participants have a sophisticated understanding of the political process, and behave strategically in their allocation of contributions to state legislators as if seeking to purchase influence over regulatory policy. We find that interests respond defensively to contributions from rivals, take into account the configuration of support available to them in both the legislature and the regulatory commission, and vary their contributions according to variations in relative costs for influence by different legislatures. This strategic behavior supports a theory that commercially motivated interests contribute campaign resources in order to mobilize legislators to influence the decisions of regulatory agencies. We also report evidence that restrictions on campaign finance do not affect all interests equally. The paper therefore provides positive evidence on the nature and effects of campaign contributions in regulated industries where interest group competition may be sharp.
Lobbying and Cournot-Nash competition
Journal of International Economics, 1993
Arguments for strategic trade intervention with Cournot duopolists are reconsidered in a model where domestic firms can lobby for increased subsidies. An export subsidy may not improve national welfare if lobbying costs are included. Even if an optimal positive subsidy exists, the government needs information about lobbying effectiveness in order to correctly implement the program.
ISSN: 1955-611XHeterogeneous Lobbying Efficiency ∗
2008
Firms are actively involved in the formation of policies. So far, the literature has focused on the relationship between exposure to the competition and the level of protection. The ability of lobbies to achieve a more favorable policy is then directly related to the reaction of their welfare to the policy. This monotonic relationship contradicts the idea that all lobbies do not have the same efficiency. Indeed, this efficiency cannot be uniquely driven by the exposure to competition. This paper proposes an original approach of the lobbying activity taking into account that lobbies ’ efficiency is heterogeneous. Just as there are some skilled and unskilled cards players. This paper highlights two types of efficiency, the passive and the active. First, according to the sensitivity of the government to the policy, two lobbies equally affected by the policy may pay different contributions to obtain the same protection level. Second, if the active efficiency is introduced, then two lobb...
Protection, lobbying, and market structure
Journal of International Economics, 2001
Ce document est publié dans l'intention de rendre accessibles les résultats préliminaires de la recherche effectuée au CIRANO, afin de susciter des échanges et des suggestions. Les idées et les opinions émises sont sous l'unique responsabilité des auteurs, et ne représentent pas nécessairement les positions du CIRANO ou de ses partenaires. This paper presents preliminary research carried out at CIRANO and aims at encouraging discussion and comment. The observations and viewpoints expressed are the sole responsibility of the authors. They do not necessarily represent positions of CIRANO or its partners.
Political competition, campaign contributions and the monopolisation of industries
1995
The present paper develops a model of endogenous policy making where a 'low regulation' party / and a 'high regulation' party h compete for campaign contributions spent by a dominating low-cost firm within a regulated industry. The model shows that assuming an endogenous market structure reinforces the economic impacts of lobbying activities compared to the case of a fixed number of firms. In particular, political competition can lead to a level of regulation where all firms using the high-cost technology decide to leave the market such the dominating firm becomes a monopolist. This outcome is c.p. the more likely, the larger the cost differential between the lobbying firm and its high-cost competitors is, and the less external financial sources like, e.g., governmental grants are available to the political parties. Moreover, ideological'constraints that prevent the low regulation party from taking up its equilibrium position will also increase the probability of monopolisation.
Heterogeneous Lobbying Eciency
Firms are actively involved in the formation of policies. So far, the literature has focused on the relationship between exposure to the competition and the level of protection. The ability of lobbies to achieve a more favorable policy is then directly related to the reaction of their welfare to the policy. This monotonic relationship contradicts the idea that all lobbies do not have the same efficiency. Indeed, this efficiency cannot be uniquely driven by the exposure to competition. This paper proposes an original approach of the lobbying activity taking into account that lobbies' efficiency is heterogeneous. Just as there are some skilled and unskilled cards players. This paper highlights two types of efficiency, the passive and the active. First, according to the sensitivity of the government to the policy, two lobbies equally affected by the policy may pay different contributions to obtain the same protection level. Second, if the active efficiency is introduced, then two lobbies exhibiting the same sensitivity to the policy may obtain two different equilibrium policies.
Journal of Economics & Management Strategy, 2007
To what extent can market participants affect the outcomes of regulatory policy? In this paper, we study the effects of one potential source of influence-campaign contributions-from competing interests in the local telecommunications industry, on regulatory policy decisions of state public utility commissions. Using a unique new data set, we find, in contrast to much of the literature on campaign contributions, that there is a significant effect of private money on regulatory outcomes. Indeed, this result is robust to numerous alternative specifications and persists with instrumentation. We also assess the extent of omitted variable bias that would have to exist to obviate the estimated result. We find that for our result to be spurious, omitted variables would have to explain more than five times the variation in the mix of private money as is explained by the variables included in our analysis. We consider this to be very unlikely.