2021/06/25 by Bo Cowgill, Andrea Prat, Cowgill, Bo +3
Business, Management and Accounting · #Corporate Finance and Governance #FOS: Economics and business #General Economics (econ.GN) #Political Influence and Corporate Strategies
paper · pdf · doi:10.48550/arxiv.2106.13612
openalex publication_date 2021/06/25 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We study the link between political influence and industrial concentration. We present a joint model of political influence and market competition: an oligopoly lobbies the government over regulation, and competes in the product market shaped by this influence. We show broad conditions for mergers to increase lobbying, both on the intensive margin and the extensive margin. We combine data on mergers with data on lobbying expenditures and campaign contributions in the US from 1999 to 2017. We document a positive association between mergers and lobbying, both by individual firms and by industry trade associations. Mergers are also associated with extensive margin changes such as the formation of in-house lobbying teams and corporate PACs. We find some evidence for a positive association between mergers and higher campaign contributions.