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Lobbying and regulation in a political economy: Evidence from the U.S. cellular industry

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  • Tomaso Duso

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Abstract

In this paper we empirically test the simultaneity between the effects and the determinants of price regulation in the U.S. mobile telecommunications industry. We find that the regulatory regime is endogenous to firms pricing strategies. Because of lobbying successfulness, firms avoided regulation in those markets where it would have been more effective. Therefore, regulation did not significantly reduce cellular tariffs in regulated markets but it would have decreased them if adopted in non-regulated ones. Also, we provide evidence that the choice of the regulatory regime strongly depends on the political as well as regulatory environments. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Tomaso Duso, 2005. "Lobbying and regulation in a political economy: Evidence from the U.S. cellular industry," Public Choice, Springer, vol. 122(3), pages 251-276, March.
  • Handle: RePEc:kap:pubcho:v:122:y:2005:i:3:p:251-276
    DOI: 10.1007/s11127-005-3293-y
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    Citations

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    Cited by:

    1. Tomaso Duso & Astrid Jung, 2012. "Product Market Competition and Lobbying Coordination in the U.S. Mobile Telecommunications Industry," Journal of Industry, Competition and Trade, Springer, vol. 12(2), pages 177-201, June.
    2. Bortolotti, Bernardo & Cambini, Carlo & Rondi, Laura, 2013. "Reluctant regulation," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 804-828.
    3. Axel Dreher & Lars-H. Siemers, 2009. "The nexus between corruption and capital account restrictions," Public Choice, Springer, vol. 140(1), pages 245-265, July.
    4. Joan-Ramon Borrell & Mara Tolosa, 2008. "Endogenous antitrust: cross-country evidence on the impact of competition-enhancing policies on productivity," Applied Economics Letters, Taylor & Francis Journals, vol. 15(11), pages 827-831.
    5. Duso, Tomaso & Seldeslachts, Jo, 2010. "The political economy of mobile telecommunications liberalization: Evidence from the OECD countries," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 199-216, June.
    6. Michael Schmidthaler & Jed Cohen & Johannes Reichl & Stefan Schmidinger, 2015. "The effects of network regulation on electricity supply security: a European analysis," Journal of Regulatory Economics, Springer, vol. 48(3), pages 285-316, December.
    7. Christos Genakos & Tommaso M. Valletti & Frank Verboven, 2017. "Evaluating Market Consolidation in Mobile Communications," CESifo Working Paper Series 6509, CESifo Group Munich.
    8. Guerriero, Carmine, 2013. "The political economy of incentive regulation: Theory and evidence from US states," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 91-107.
    9. Guerriero, Carmine, 2011. "Accountability in government and regulatory policies: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 453-469.
    10. Estache, Antonio & Wren-Lewis, Liam, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," CEPR Discussion Papers 8082, C.E.P.R. Discussion Papers.
    11. Evans, Joanne & Levine, Paul & Trillas, Francesc, 2008. "Lobbies, delegation and the under-investment problem in regulation," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 17-40, January.
    12. Marzano, Riccardo, 2015. "One more ride on the merry-go-round! Public ownership and delayed competition in local public services," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 981-996.
    13. Michael Reksulak, 2010. "Antitrust public choice(s)," Public Choice, Springer, vol. 142(3), pages 423-428, March.
    14. Christos Genakos & Tommaso Valletti, 2011. "Testing The “Waterbed” Effect In Mobile Telephony," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1114-1142, December.
    15. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.
    16. Tomaso Duso, 2002. "On the Politics of the Regulatory Reform: Econometric Evidence from the OECD Countries," CIG Working Papers FS IV 02-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    17. Toivanen, Otto, 2004. "Choosing Standards," Discussion Papers 937, The Research Institute of the Finnish Economy.
    18. Erkan Erdogdu, 2014. "The Political Economy of Electricity Market Liberalization: A Cross-country Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    19. Duso, Tomaso & Roller, Lars-Hendrik, 2003. "Endogenous deregulation: evidence from OECD countries," Economics Letters, Elsevier, vol. 81(1), pages 67-71, October.
    20. Antonio Estache & Liam Wren-Lewis, 2011. "Anti-Corruption Policy in Theories of Sector Regulation," Chapters,in: International Handbook on the Economics of Corruption, Volume Two, chapter 9 Edward Elgar Publishing.
    21. Tomaso Duso & Astrid Jung, 2007. "Market Conduct and Endogenous Lobbying: Evidence from the U.S. Mobile Telecommunications Industry," Journal of Industry, Competition and Trade, Springer, vol. 7(1), pages 9-29, March.
    22. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    23. repec:kap:revind:v:50:y:2017:i:4:d:10.1007_s11151-016-9556-6 is not listed on IDEAS
    24. repec:eee:corfin:v:46:y:2017:i:c:p:51-76 is not listed on IDEAS
    25. Brown, Richard S., 2016. "Lobbying, political connectedness and financial performance in the air transportation industry," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 61-69.

    More about this item

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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