Can Lobbyists Prevent Consumer Monopsony? Evidence from the US Telecommunications Sector

54 Pages Posted: 27 May 2004 Last revised: 13 Feb 2018

Date Written: December 14, 2007

Abstract

Local exchange carriers maintain significantly smaller capital stocks in states that restrict campaign contributions. This relationship is difficult to rationalize as (i) an artifact of endogeneity bias or (ii) evidence that restrictions constrain producers' monopolistic opportunities. Instead, it finds a robust explanation in standard political economy models - i.e., restricting campaign contributions can retard economic performance by facilitating consumers' monopsonistic ambitions, weakening regulatory commitments, and easing the expropriation of real options.

Keywords: Campaign Finance Laws, Regulatory Capture, Credible Commitment, Real Options, Competition Policy, Economic Performance

JEL Classification: D72, E61, H11, K23, L43, L51, L96, M38

Suggested Citation

Falaschetti, Dino, Can Lobbyists Prevent Consumer Monopsony? Evidence from the US Telecommunications Sector (December 14, 2007). FSU College of Law, Law and Economics Paper No. 7-23; FSU College of Law, Public Law Research Paper No. 271. Available at SSRN: https://ssrn.com/abstract=551142 or http://dx.doi.org/10.2139/ssrn.551142

Dino Falaschetti (Contact Author)

U.S. House of Representatives ( email )

Committee on Financial Services
2129 Rayburn House Office Building
Washington, DC District of Columbia 20515
United States

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