The Effect of Interest Group Pressure on Favorable Regulatory Decisions: The Case of Certificate-of-Need Laws

29 Pages Posted: 3 Oct 2017

See all articles by Thomas Stratmann

Thomas Stratmann

George Mason University - Buchanan Center Political Economy; George Mason University - Mercatus Center; CESifo (Center for Economic Studies and Ifo Institute)

Steven Monaghan

Independent

Date Written: August 29, 2017

Abstract

Certificate-of-need (CON) laws currently prohibit entry or expansion of healthcare facilities in 35 states and the District of Columbia. In a lengthy process, medical providers must prove to regulators that their new services and equipment are needed. Medical providers who succeed are effectively guaranteed market power, and thus are able to acquire economic rents. These economic rents create an incentive for medical providers to engage in rent-seeking. Using recent data from Georgia, Michigan, and Virginia, we examine whether political campaign contributions made by medical providers affect the likelihood of their CON proposals being approved. Our results are among the first to consider the effect of campaign contributions on industry regulation.

Keywords: rent-seeking, lobbying, regulation, public health, health regulation, campaign finance, non-market strategies, healthcare

JEL Classification: D72, D73, H75, I18, K23

Suggested Citation

Stratmann, Thomas and Monaghan, Steven, The Effect of Interest Group Pressure on Favorable Regulatory Decisions: The Case of Certificate-of-Need Laws (August 29, 2017). Mercatus Research Paper, Available at SSRN: https://ssrn.com/abstract=3046838 or http://dx.doi.org/10.2139/ssrn.3046838

Thomas Stratmann (Contact Author)

George Mason University - Buchanan Center Political Economy ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-2330 (Phone)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://www.mercatus.org/scholars/thomas-stratmann

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Steven Monaghan

Independent

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
31
Abstract Views
279
PlumX Metrics