Competition and political organization: Together or alone in lobbying for trade policy? NBER Working Paper No

This paper employs a novel data set on lobbying expenditures to measure the degree of within-sector political organization and to explore the determinants of the mode of lobbying and political organization across U.S. industries. The data show that sectors characterized by a higher degree of competition 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\u85t 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 rms are therefore more likely to lobby together, thereby simultaneously raising tari¤s on all products in the sector