When Do Firms Hire Lobbyists? The Organization of Lobbying at the Federal Communications Commission

Abstract

This paper examines the explanatory power of transaction cost economics to explain vertical integration decisions for lobbying by firms. We examine 150 lobbying contacts at the Federal Communications Commission (FCC) on the issue of payphone compensation for dial-around calls. When firms lobby on topics that are highly firm-specific and prone to sensitive-information leakage, they are more likely to use employees to lobby the FCC. However, when topics arise that are more general to the industry and do not include sensitive information, firms are more likely to use outside counsel to lobby the FCC.

Keywords: Lobbying, Transaction Cost Economics, Appropriability, Telecommunications

JEL Classification: H1, K2, L5