Lobbying for Regulation Reform by Industry Leaders

Toshihiro Matsumura and Atsushi Yamagishi

Journal of Regulatory Economics, 2017, vol. 52, issue 1, No 4, 63-76

Abstract: Abstract We investigate a free-entry market in which incumbents lobby for regulatory changes that affect the cost for all firms equally. First, we investigate a model in which the lobbying affects marginal costs and incumbents produce before followers enter. We find that incumbents have an incentive to weaken or strengthen regulations depending on the simple demand condition. Next, we discuss the case of Cournot competition and illustrate that cost asymmetry may induce incumbents to engage in cost-raising lobbying. Finally, we examine a model in which lobbying affects fixed costs and find that incumbents have an incentive to strengthen regulations unless they are substantially less efficient than followers are.

Keywords: Lobbying; Common costs; Free-entry market; Stackelberg; Regulation costs (search for similar items in EconPapers)
JEL-codes: D43 L13 L51 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11149-017-9334-x

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