Lobbying and the Power of Multinational Firms
AbstractAre national or multinational firms better lobbyists? This paper analyzes the extent of national environmental regulation when policy is determined in a lobbying game between a government and firm. We compare the resulting regulation levels for national and multinational firms. We identify three countervailing forces, the easier-to-shut-down effect, the easier-to-curb-exports effect and the multiple-plant effect. The interplay of these three forces determines whether national or multinational firms produce more, depending on such parameters as the potential environmental damages, transportation costs and the in uence of the firm. We also show that welfare levels are higher with multinational firms than with national firms when there is no lobbying, but that lobbying can reverse the welfare ordering.
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Bibliographic InfoPaper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 1008.
Length: 32 pages
Date of creation: Aug 2010
Date of revision:
Multinational enterprises; regulation; policy formation; lobbying; interest groups; foreign direct investment;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-POL-2010-09-11 (Positive Political Economics)
- NEP-REG-2010-09-11 (Regulation)
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