This paper employs a novel data set on lobbying expenditures to measure the degree of within-sector political organization and to explore the determinants of the mode of lobbying and political organization across U.S. industries. The data show that sectors characterized by a higher degree of competition (more substitutable products and a lower concentration of production) tend to lobby more together (through a sector-wide trade association), while sectors with higher concentration and more differentiated products lobby more individually. The paper proposes a theoretical model to interpret the empirical evidence. In an oligopolistic market, firms can benefit from an increase in their product-specific protection measure, if they can raise prices and profits. They find it less profitable to do so in a competitive market where attempts to raise prices are more likely to reduce profits. In competitive markets firms are therefore more likely to lobby together thereby simultaneously raising tariffs on all products in the sector.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
14771.
Length: Date of creation: Mar 2009 Date of revision: Handle: RePEc:nbr:nberwo:14771
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Find related papers by JEL classification: D7 - Microeconomics - - Analysis of Collective Decision-Making F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Leonardo Felli & Antonio Merlo, 2001.
"Endogenous Lobbying,"
PIER Working Paper Archive
04-043, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Oct 2004.
[Downloadable!]
Felli, L. & Merlo, A., 2000.
"Endogenous Lobbying,"
Working Papers
00-04, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!]
Leonardo Felli & Antonio Merlo, .
"Endogenous Lobbying,"
CARESS Working Papres
00-03, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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