Lobbying and Regulation in a Political Economy: Evidence from the U.S. Cellular Industry
German Institute for Economic Research (DIW Berlin); Duesseldorf Institute for Competition Economics (DICE)
Public Choice, Forthcoming
In this paper we empirically test the simultaneity between the effects and the determinants of price regulation in the U.S. mobile telecommunications industry. We find that the regulatory regime is endogenous to firms pricing strategies. Because of lobbying successfulness, firms avoided regulation in those markets where it would have been more effective. Therefore, regulation did not significantly reduce cellular tariffs in regulated markets but it would have decreased them if adopted in non-regulated ones. Also, we provide evidence that the choice of the regulatory regime strongly depends on the political as well as regulatory environments.
Number of Pages in PDF File: 33
Keywords: Endogenous Price Regulation, Lobbying Activities, Political Economy, Endogenous Switching Regression, Mobile Telecommunications, U.S.
JEL Classification: L5, D78, C35, L96
Date posted: November 12, 2003