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Lobbying and the Power of Multinational Firms

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Author Info

  • Andreas Polk

    () (Berlin School of Economics and Law)

  • Armin Schmutzler

    () (Socioeconomic Institute, University of Zurich)

  • Adrian Muller

    () (Socioeconomic Institute, University of Zurich)

Abstract

Are 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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File URL: http://www.soi.uzh.ch/research/wp/2010/wp1008.pdf
File Function: first version, 2010
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Bibliographic Info

Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 1008.

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Length: 32 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:soz:wpaper:1008

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Keywords: Multinational enterprises; regulation; policy formation; lobbying; interest groups; foreign direct investment;

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References

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  1. Donja Darai & Jens Grosser & Nadja Trhal, 2009. "Patents versus Subsidies – A Laboratory Experiment," Working Papers 0905, University of Zurich, Socioeconomic Institute.
  2. Andrew J. Oswald & Rainer Winkelmann, 2008. "Delay and Deservingness after Winning the Lottery," Working Papers 0815, University of Zurich, Socioeconomic Institute.
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  5. Sandra Hanslin, 2008. "The effect of trade openness on optimal government size under endogenous firm entry," Working Papers 0802, University of Zurich, Socioeconomic Institute.
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  7. Nick Netzer & Florian Scheuer, 2010. "Competitive screening in insurance markets with endogenous wealth heterogeneity," Economic Theory, Springer, vol. 44(2), pages 187-211, August.
  8. Sandra Hanslin, 2010. "Trade Openness, Gains from Variety and Government Spending," Working Papers 1004, University of Zurich, Socioeconomic Institute.
  9. Sule Akkoyunlu & Ilja Neustadt & Peter Zweifel, 2008. "Why does the amount of income redistribution differ between United States and Europe? The Janus face of Switzerland," Working Papers 0810, University of Zurich, Socioeconomic Institute.
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Cited by:
  1. Michele Sennhauser, 2009. "Why the Linear Utility Function is a Risky Choice in Discrete-Choice Experiments," Working Papers 1014, University of Zurich, Socioeconomic Institute.

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