Habitual and Occasional Lobbyers in the Us Steel Industry: An EM Algorithm Pooling Approach

Posted: 2 Jun 1998

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Jungsywan H. Sepanski

Stephen M. Ross School of Business at the University of Michigan

Bernard Yin Yeung

National University of Singapore - Business School

Date Written: February 21, 1997

Abstract

Using firm level data from the U.S. steel industry, we find that lobbying for import protection is habit forming, as suggested in the rent-seeking literature. Controlling for firm performance and other factors, past lobbying increases the likelihood of current lobbying in our full sample. Because addicted firms should behave differently from other firms, we let an EM algorithm to sort our firms into groups with different propensity to lobby. A two pools model consisting of occasional and habitual rent-seekers emerges. Occasional rent-seekers' lobbying depends on their market performance. Habitual rent-seekers' lobbying is unrelated to the market performance of the firm, and only depends on previous lobbying. The evidence is consistent with political rent seeking having dynamic economies of scale: rent-seeking makes further rent-seeking easier and more lucrative.

JEL Classification: F13

Suggested Citation

Morck, Randall K. and Sepanski, Jungsywan H. and Yeung, Bernard Yin, Habitual and Occasional Lobbyers in the Us Steel Industry: An EM Algorithm Pooling Approach (February 21, 1997). Available at SSRN: https://ssrn.com/abstract=93768

Randall K. Morck

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada
780-492-5683 (Phone)
780-492-3325 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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European Corporate Governence Institute ( email )

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Belgium

Asian Bureau of Finance and Economic Research ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Jungsywan H. Sepanski (Contact Author)

Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109-1234
United States
313-764-6891 (Phone)

Bernard Yin Yeung

National University of Singapore - Business School ( email )

15 Kent Ridge Drive
BIZ 1 Level 6
Singapore, 119245
Singapore
65 6516 3075 (Phone)
65 6779 1365 (Fax)

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