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Market Conduct and Endogenous Lobbying: Evidence from the U.S. Mobile Telecommunications Industry

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  • Tomaso Duso
  • Astrid Jung

Abstract

This paper empirically explores the relationship between firms’ market behavior and their lobbying activities in a regulated market. In particular, we investigate whether the amount of contributions offered by cellular service providers to fund the campaigns of political parties affected market conduct in the early US mobile telecommunications industry. We structurally estimate market interactions while taking the potential endogeneity of lobbying decisions into account. Our results show that competition was more intense in those states where campaign contributions by the cellular industry have been higher. Furthermore, we reject the hypothesis that lobbying activities can be regarded as exogenous in the study of market conduct. ZUSAMMENFASSUNG - (Marktverhalten und Endogenes Lobbying: Empirische Evidenz für die Mobilfunkindustrie der USA) Im diesem Beitrag wird der Zusammenhang zwischen dem Unternehmensverhalten in einem regulierten Produktmarkt und Lobbying-Aktivitäten empirisch untersucht. Insbesondere analysieren wir, ob die für Wahlkampagnezwecke ausgegebenen Parteispenden von US-amerikanischen Mobilfunkunternehmen Ende der achtziger Jahre einen Einfluss auf das Markverhalten hatten. Wir schätzen ein strukturiertes Produktmarktmodell unter Berücksichtigung der potentiellen Endogenität der Lobbying-Aktivitäten. Unsere Analyse zeigt, dass der Produktmarktwettbewerb in denjenigen U.S. Staaten intensiver war, in denen die Mobilfunkunternehmen höhere Parteispenden leisteten. Des Weiteren wird die Hypothese, dass die Lobbying-Aktivitäten exogen gegenüber dem Marktverhalten sind, statistisch abgelehnt.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 02-35.

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Length: 30 pages
Date of creation: Dec 2002
Date of revision:
Publication status: Forthcoming in the Journal of Industry, Competition and Trade .
Handle: RePEc:wzb:wzebiv:fsiv02-35

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