On the Formation of Industry Lobby Groups

Posted: 16 Jan 2001

See all articles by Richard Damania

Richard Damania

World Bank; University of Adelaide - School of Economics

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics; Institute for Corruption Studies

Abstract

This paper provides a step towards a more complete theory of lobbying, extending the menu-auction model of Grossman and Helpman [Grossman, G.M., Helpman, E., 1994. American Economic Review 84, 833-850] A new explanation is proposed for why more concentrated industries more easily overcome the free-rider problem inherent in political collective action. Instead of focusing on transactions costs as Olson [Olson, M., 1965. The Logic of Collective Action, Harvard University Press, Cambridge, MA], we show that more collusive industries with higher collusive profits have a greater incentive to form lobby groups and to contribute to industry lobbying. Moreover, more polluting industries also have a greater incentive to form and contribute to a lobby group.

Keywords: lobby group formation, collective action, collusion, pollution tax

JEL Classification: H2, L13, L2, L5, Q2

Suggested Citation

Damania, Richard and Fredriksson, Per G., On the Formation of Industry Lobby Groups. Available at SSRN: https://ssrn.com/abstract=251349

Richard Damania (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

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