Political Power and Market Power

Department of Economics & Decision Sciences

Guest speaker : Andrea Prat (Columbia Univ)

Room T-011

We study the link between political influence and industrial concentration. A model of firm lobbying shows that concentration and regulation may be either strategic complements or substitutes. Using data for the past 20 years in the US, we show how lobbying increases when an industry becomes more concentrated, using mergers as shocks to concentration. This holds true both for expenditures on federal lobbying as well as expenditures on campaign contributions.

Joint work with Bo Cowgill & Tommaso Valletti