Competition and political organization: Together or alone in lobbying for trade policy? Working Paper 14771, National Bureau of Economic Research

This paper employs a novel data set on lobbying expenditures to measure the degree of political organization within sectors and to explore the determinants of the mode of lobbying and political organization across US industries. The data show that sectors characterized by a higher degree of competition (more substitutable products, and a lower concentration of production) tend to lobby more together (through a sector-wide trade association), while sectors with higher concentration and more di¤erentiated products lobby more individually. The paper proposes a theoretical model to interpret the empirical evidence. In an oligopolistic market, \u85 rms can bene t from an increase in their product-speci\u85c protection measure, if they can raise prices and pro\u85ts. They \u85nd it less pro\u85table to do so in a competitive market where attempts to raise prices are more likely to reduce pro\u85ts. In competitive markets \u85rms are therefore more likely to lobby together thereby simultaneously raising tari¤s on all products in the sector