Firm Characteristics and Influence on Government Rule-Making: theory and evidence
AbstractAn adversarial game is used to model the amount of influence a firm has over a government regulator, and its equilibrium level of regulation, as a function of firm fundamentals. The effective influence of a firm is identified as comprising both intrinsic and exerted components; where the latter involves distorting regulation via a transfer to the regulator. Understanding the source of a firm's high influence is found to be important for -among other things - predicting whether it faces higher or lower regulatory constraint than other firms. Data from the World Business Environment Survey provides strong evidence in support of model hypotheses across a wide range of government agents, countries, and regulatory areas. Of particular relevance to public debate, large firms are found to be more likely to be influential, but also more likely to experience regulatory constraint than smaller firms.
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Bibliographic InfoPaper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 649.
Date of creation: Feb 2011
Date of revision:
Political Economy; Regulation; Influence;
Other versions of this item:
- Aisbett, Emma & McAusland, Carol, 2013. "Firm characteristics and influence on government rule-making: Theory and evidence," European Journal of Political Economy, Elsevier, vol. 29(C), pages 214-235.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-POL-2011-06-18 (Positive Political Economics)
- NEP-REG-2011-06-18 (Regulation)
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