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Lobbying for Regulation Reform by Industry Leaders

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  • Toshihiro Matsumura

    (The University of Tokyo)

  • Atsushi Yamagishi

    (The University of Tokyo)

Abstract

We investigate a free-entry market in which incumbents lobby for regulatory changes that affect the cost for all firms equally. First, we investigate a model in which the lobbying affects marginal costs and incumbents produce before followers enter. We find that incumbents have an incentive to weaken or strengthen regulations depending on the simple demand condition. Next, we discuss the case of Cournot competition and illustrate that cost asymmetry may induce incumbents to engage in cost-raising lobbying. Finally, we examine a model in which lobbying affects fixed costs and find that incumbents have an incentive to strengthen regulations unless they are substantially less efficient than followers are.

Suggested Citation

  • Toshihiro Matsumura & Atsushi Yamagishi, 2017. "Lobbying for Regulation Reform by Industry Leaders," Journal of Regulatory Economics, Springer, vol. 52(1), pages 63-76, August.
    • Handle: RePEc:kap:regeco:v:52:y:2017:i:1:d:10.1007_s11149-017-9334-x
    DOI: 10.1007/s11149-017-9334-x
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    Cited by:

    1. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Lack of commitment to future privatization policies may lead to worst welfare outcome," Economic Modelling, Elsevier, vol. 88(C), pages 181-187.
    2. Susumu Cato & Toshihiro Matsumura, 2019. "Entry License Tax: Stackelberg versus Cournot," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 175(2), pages 258-271.
    3. Junichi Haraguchi & Toshihiro Matsumura, 2021. "Profit‐enhancing entries in mixed oligopolies," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 33-55, July.
    4. Dapeng Cai & Jie Li, 2019. "To favor more or less? Corporate lobbying over preferential treatment to state-owned enterprises," Journal of Regulatory Economics, Springer, vol. 55(3), pages 334-357, June.

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    More about this item

    Keywords

    Lobbying; Common costs; Free-entry market; Stackelberg; Regulation costs;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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