Competition and Political Organization: Together or Alone in Lobbying for Trade Policy

45 Pages Posted: 26 Feb 2009

See all articles by Matilde Bombardini

Matilde Bombardini

University of British Columbia (UBC)

Francesco Trebbi

Vancouver School of Economics; National Bureau of Economic Research (NBER)

Date Written: February 25, 2009

Abstract

This paper employs a novel data set on lobbying expenditures to measure the degree of within-sector political organization and to explore the determinants of the mode of lobbying and political organization across U.S. industries. The data show that sectors characterized by a higher degree of competition (more substitutable products, and a lower concentration of production) tend to lobby more together (through a sector-wide trade association), while sectors with higher concentration and more differentiated products lobby more individually. The paper proposes a theoretical model to interpret the empirical evidence. In an oligopolistic market, firms can benefit from an increase in their product-specific protection measure, if they can raise prices and profits. They find it less profitable to do so in a competitive market where attempts to raise prices are more likely to reduce profits. In competitive markets firms are therefore more likely to lobby together thereby simultaneously raising tariffs on all products in the sector.

Keywords: Lobby formation, Collective action, Product market competition

JEL Classification: F13, L13, D7, H0

Suggested Citation

Bombardini, Matilde and Trebbi, Francesco, Competition and Political Organization: Together or Alone in Lobbying for Trade Policy (February 25, 2009). Chicago Booth School of Business Research Paper No. 09-06, Available at SSRN: https://ssrn.com/abstract=1349327 or http://dx.doi.org/10.2139/ssrn.1349327

Matilde Bombardini

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

Francesco Trebbi (Contact Author)

Vancouver School of Economics ( email )

University of British Columbia
6000 Iona Dr.
Vancouver Canada, BC V6T 1L4
Canada

HOME PAGE: http://faculty.arts.ubc.ca/ftrebbi/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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