IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/693.html
   My bibliography  Save this paper

Political competition, campaign contributions and the monopolisation of industries

Author

Listed:
  • Michaelis, Peter

Abstract

The present paper develops a model of endogenous policy making where a 'low regulation' party / and a 'high regulation' party h compete for campaign contributions spent by a dominating low-cost firm within a regulated industry. The model shows that assuming an endogenous market structure reinforces the economic impacts of lobbying activities compared to the case of a fixed number of firms. In particular, political competition can lead to a level of regulation where all firms using the high-cost technology decide to leave the market such the dominating firm becomes a monopolist. This outcome is c.p. the more likely, the larger the cost differential between the lobbying firm and its high-cost competitors is, and the less external financial sources like, e.g., governmental grants are available to the political parties. Moreover, ideological'constraints that prevent the low regulation party from taking up its equilibrium position will also increase the probability of monopolisation.

Suggested Citation

  • Michaelis, Peter, 1995. "Political competition, campaign contributions and the monopolisation of industries," Kiel Working Papers 693, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:693
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/46769/1/257467025.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Moore, Michael O. & Suranovic, Steven M., 1993. "Lobbying and Cournot-Nash competition : Implications for strategic trade policy," Journal of International Economics, Elsevier, vol. 35(3-4), pages 367-376, November.
    2. Conrad, Klaus & Wang, Jianmin, 1993. "The effect of emission taxes and abatement subsidies on market structure," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 499-518.
    3. Oster, Sharon, 1982. "The Strategic Use of Regulatory Investment by Industry Sub-Groups," Economic Inquiry, Western Economic Association International, vol. 20(4), pages 604-618, October.
    4. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-271, May.
    5. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    6. Hillman, Arye L & Ursprung, Heinrich W, 1994. "Domestic Politics, Foreign Interests,, and International Trade Policy: Reply," American Economic Review, American Economic Association, vol. 84(5), pages 1476-1478, December.
    7. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521362474.
    8. Arye L. Hillman & Heinrich W. Ursprung, 2008. "Domestic Politics, Foreign Interests, and International Trade Policy," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 113-129, Springer.
    9. Michaelis, Peter, 1994. "Regulate us, please!: On strategic lobbying in Cournot-nash oligopoly," Kiel Working Papers 626, Kiel Institute for the World Economy (IfW Kiel).
    10. Hofer, Tracy & Woodruff, Chris, 1994. "Domestic Politics, Foreign Interests, and International Trade Policy: Comment," American Economic Review, American Economic Association, vol. 84(5), pages 1474-1475, December.
    11. Pashigian, B. Peter, 1983. "The Effect of Environmental Regulation on Optimal Plant Size and Factor Shares," Working Papers 25, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gould, David M. & Woodbridge, Graeme L., 1998. "The political economy of retaliation, liberalization and trade wars," European Journal of Political Economy, Elsevier, vol. 14(1), pages 115-137, February.
    2. Feeney, JoAnne & Hillman, Arye L., 1995. "Asset markets and individual trade policy preferences," Discussion Papers, Series II 282, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. Miaojie Yu, 2005. "Electoral Competiton and Optimal Tariffs," International Trade 0509002, University Library of Munich, Germany.
    4. Philip I. Levy, 2003. "Non-Tariff Barriers as a Test of Political Economy Theories," Working Papers 852, Economic Growth Center, Yale University.
    5. Koichi Kagitani, 2009. "Political Economy Of Strategic Export Policy In A Differentiated Duopoly," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 236-252, June.
    6. Michaelis, Peter, 1994. "Regulate us, please!: On strategic lobbying in Cournot-nash oligopoly," Kiel Working Papers 626, Kiel Institute for the World Economy (IfW Kiel).
    7. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    8. Kishore Gawande & Pravin Krishna & Michael J. Robbins, 2006. "Foreign Lobbies and U.S. Trade Policy," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 563-571, August.
    9. Everaert, Greetje M.M., 2004. "The political economy of restructuring and subsidisation : an international perspective," BOFIT Discussion Papers 12/2004, Bank of Finland, Institute for Economies in Transition.
    10. Kolomak Evgeniya, 2004. "How high are the barriers of the regional price regulation in Russia?," EERC Working Paper Series 04-11e, EERC Research Network, Russia and CIS.
    11. Edward D. Mansfield & Brian M. Pollins, 2001. "The Study of Interdependence and Conflict," Journal of Conflict Resolution, Peace Science Society (International), vol. 45(6), pages 834-859, December.
    12. Stanley Reiter, 1996. "On endogenous economic regulation," Review of Economic Design, Springer;Society for Economic Design, vol. 2(1), pages 211-243, December.
    13. Georges A. Tanguay & Paul Lanoie & Jérôme Moreau, 2001. "Environmental Policy, Public Interest and Political Market," Cahiers de recherche 01-01, HEC Montréal, Institut d'économie appliquée.
    14. Pravin Krishna & Devashish Mitra, 2003. "Reciprocated Unilateralism in Trade Policy: An Interest-Group Approach," NBER Working Papers 9631, National Bureau of Economic Research, Inc.
    15. Raymond Riezman & John Douglas Wilson, 2013. "Political Reform and Trade Policy," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 13, pages 201-224, World Scientific Publishing Co. Pte. Ltd..
    16. Antràs, Pol & Padró i Miquel, Gerard, 2011. "Foreign influence and welfare," Journal of International Economics, Elsevier, vol. 84(2), pages 135-148, July.
    17. Pokrivcak, Jan, 2007. "Economics and Political Economy of Regional Trade Agreements," Working Papers 7286, TRADEAG - Agricultural Trade Agreements.
    18. Paul Lanoie & Jérôme Moreau & Georges A. Tanguay, 2001. "Environmental Policy, Public Interest and Political Market," CIRANO Working Papers 2001s-37, CIRANO.
    19. repec:zbw:bofitp:2004_012 is not listed on IDEAS
    20. Afontsev Serguey, 2000. "Political Economy of Tariff Protection in Russia: an Empirical Study," EERC Working Paper Series 99-16e, EERC Research Network, Russia and CIS.
    21. Schleich, Joachim & Orden, David, 1996. "Efficient choice among domestic and trade policies in the Grossman-Helpman Interest-Group Model," Bulletins 7458, University of Minnesota, Economic Development Center.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkwp:693. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.