Political Power and Market Power

Political Power and Market Power

 

 

Bo Cowgill

Columbia University - Columbia Business School

Andrea Prat

Columbia University - Columbia Business School, Finance; Centre for Economic Policy Research (CEPR)

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Date Written: April 2022

Abstract

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 study whether merging firms' influence activity increases or decreases after a merger. We document an increase in lobbying activity and we find some evidence for an increase in campaign contributions.