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Lobbying and the Power of Multinational Firms

  • Andreas Polk

    ()

    (Berlin School of Economics and Law)

  • Armin Schmutzler

    ()

    (Socioeconomic Institute, University of Zurich)

  • Adrian Muller

    ()

    (Socioeconomic Institute, University of Zurich)

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.econ.uzh.ch/static/wp_soi/wp1008.pdf
File Function: first version, 2010
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Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - 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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