Lobbying and the power of multinational firms |
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| Institution: | 1. Berlin School of Economics and Law, Badensche Str. 50-51, 10825 Berlin, Germany;2. Department of Economics, University of Zürich, Blümlisalpstrasse 10, 8006 Zürich, Switzerland;3. CEPR, London, UK;4. Institute for Environmental Decisions, ETH Zürich, Universitätstrasse 16, 8092 Zürich, Switzerland;1. Department of Mathematics, Div. of Mathematical Statistics, Stockholm University, Stockholm SE 106 91, Sweden;2. Department of Mathematical Sciences and Technology, Norwegian University of Life Sciences, Ås 1432, Norway;3. Faculty of Engineering, Tel Aviv University, Tel Aviv 69978, Israel;1. Max Planck Institute of Economics, Kahlaische Str. 10, 07745 Jena, Germany;2. DSE, University of Verona, Via dell''Artigliere 19, Verona, Italy;3. Department of Economics, Lund University, P.O. Box 7082, 220 07 Lund, Sweden;1. Milgard School of Business, University of Washington Tacoma, 1900 Commerce St., Campus Box 358420, Tacoma, WA 98402, United States;2. School of Business, University at Albany – SUNY, 1400 Washington Ave., Albany, NY 12222, United States;3. College of Business, Florida International University, Modesto A. Maidique Campus, 11200 S.W. 8th St, RB 247B, Miami, FL 33199, United States;1. International University, Quarter 6, Linh Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam;2. Vietnam National University, Ho Chi Minh City, Vietnam |
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| Abstract: | Can multinational firms exert more power than national firms by influencing politics through lobbying? To answer this question, we analyze the extent of national environmental regulation when policy is determined in a lobbying game between a government and a firm. We compare the resulting equilibrium regulation levels, outputs and welfare in a game with a multinational firm with those in an otherwise identical game with a national firm. For low transportation costs, output and pollution of a national firm are always as least as high as for a multinational; this changes for high transportation costs and intermediate damage parameters. When there is no lobbying, welfare levels are always higher with multinationals than with national firms. However, the existence of lobbying may reverse this ordering. |
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