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Competition and Political Organization: Together or Alone in Lobbying for Trade Policy?

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  • Matilde Bombardini
  • Francesco Trebbi

Abstract

This paper employs a novel data set on lobbying expenditures to measure the degree of within-sector political organization and to explore the determinants of the mode of lobbying and political organization across U.S. industries. The data show that sectors characterized by a higher degree of competition (more substitutable products and a lower concentration of production) tend to lobby more together (through a sector-wide trade association), while sectors with higher concentration and more differentiated products lobby more individually. The paper proposes a theoretical model to interpret the empirical evidence. In an oligopolistic market, firms can benefit from an increase in their product-specific protection measure, if they can raise prices and profits. They find it less profitable to do so in a competitive market where attempts to raise prices are more likely to reduce profits. In competitive markets firms are therefore more likely to lobby together thereby simultaneously raising tariffs on all products in the sector.

Suggested Citation

  • Matilde Bombardini & Francesco Trebbi, 2009. "Competition and Political Organization: Together or Alone in Lobbying for Trade Policy?," NBER Working Papers 14771, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:14771
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    More about this item

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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