Money and Power: Industry Concentration as a Determinant of Corporate Lobbying Activity

Amid increasing trends of market concentration and corporate political activity in the United States, this thesis takes a quantitative approach to evaluating Luigi Zingales’ political theory of the firm. Using data from the Economic Census and from the Center for Responsive Politics, I find that concentration as measured by four and eight largest firms’ share of establishments exhibits a significant positive relationship to corporate lobbying at the intensive margin. On the other hand, concentration as measured by four and eight largest firms’ share of employment exhibits a significant negative relationship on politically active firms’ decision to lobby at the extensive margin. Through drawing upon existing quantitative literature on this subject, I conclude that Zingales’ theory remains sound and its implications on the political economy of the United States are bleak. Further research should look into politically feasible policy solutions to this troubling relationship