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Regulate us, please!: On strategic lobbying in Cournot-nash oligopoly

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  • Michaelis, Peter

Abstract

Empirical studies on industry lobbying sometimes reveal that certain firms within an industry behave atypically in that they promote cost driving regulations like, e.g., environmental standards. For analysing this phenomenon of 'strategic lobbying1, the present paper combines a heterogeneous Cournot-Nash oligopoly with a model of endogenous policy making where two parties compete for campaign contributions spent by the regulated industry. It is shown that the existence of potential regulation gains (and consequently the incentive for strategic lobbying activities) depends on the relationship between possible cost differentials and the market structure of the industry under consideration. Based on these results, the paper examines the effects of strategic lobbying for two different scenarios. The first scenario assumes that only one firm is engaged in lobbying, whereas the second scenario looks at simultaneous (competing) lobbying activities by several firms.

Suggested Citation

  • 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).
    • Handle: RePEc:zbw:ifwkwp:626
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    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. Bartsch, Elga & Thomas, Ingo P. & Rauscher, Michael, 1993. "Environmental legislation and the impact of lobbying activities," Kiel Working Papers 562, Kiel Institute for the World Economy (IfW Kiel).
    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.
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    5. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521362474.
    6. Leslie Young & Stephen P. Magee, 1986. "Endogeneous Protection, Factor Returns and Resource Allocation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 407-419.
    7. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
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    Cited by:

    1. Bouwe R. Dijkstra & Anuj Joshua Mathew & Arijit Mukherjee, 2011. "Environmental Regulation: An Incentive for Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 19(3), pages 568-578, August.
    2. Peter Lawrence & Arijit Mukherjee, 2002. "Price-Capping Regulation as a Protectionist Strategy in Developing Countries," Keele Economics Research Papers KERP 2002/18, Centre for Economic Research, Keele University.
    3. Miles Kellerman, 2021. "Market structure and disempowering regulatory intermediaries: Insights from U.S. trade surveillance," Regulation & Governance, John Wiley & Sons, vol. 15(4), pages 1350-1369, October.
    4. Roland Vaubel, 2004. "Federation With Majority Decisions: Economic Lessons From The History Of The Unite D States, Germany And The European Union," Economic Affairs, Wiley Blackwell, vol. 24(4), pages 53-59, December.
    5. Yu-Bong Lai, 2009. "Is a Double Dividend Better than a Single Dividend?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(2), pages 342-363, June.
    6. Cheng, Chu-Chuan & Lai, Yu-Bong, 2012. "Does a stricter enforcement policy protect the environment? A political economy perspective," Resource and Energy Economics, Elsevier, vol. 34(4), pages 431-441.
    7. Y. Hossein Farzin & Jinhua Zhao, 2003. "Pollution Abatement Investment When Firms Lobby Against Environmental Regulation," Working Papers 2003.82, Fondazione Eni Enrico Mattei.
    8. Bouwe R. Dijkstra & Anuj J. Mathew & Arijit Mukherjeea, 2011. "Strict environmental policy: An incentive for FDI," Faculty Working Papers 08/11, School of Economics and Business Administration, University of Navarra.
    9. Massimiliano Vatiero, 2015. "Dominant market position and ordoliberalism," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 291-306, December.
    10. Bernhard Boockmann & Roland Vaubel, 2009. "The Theory of Raising Rivals’ Costs and Evidence from the International Labour Organisation," The World Economy, Wiley Blackwell, vol. 32(6), pages 862-887, June.
    11. Michaelis, Peter, 1995. "Political competition, campaign contributions and the monopolisation of industries," Kiel Working Papers 693, Kiel Institute for the World Economy (IfW Kiel).
    12. Peter Michaelis & Thomas Ziesemer, 2008. "Policy Diffusion, Lobbying and the Taxation of Emissions," Discussion Paper Series 302, Universitaet Augsburg, Institute for Economics.

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