Abstract
We look at a model of lobbying by oligopolistic industry where firms allocate resources between lobbying and internal cost-reducing activities. We ask the following questions: (i) if firms differ with respect to comparative advantage in lobbying, what is the equilibrium allocation of resources between lobbying and cost-reducing activities? (ii) Can lobbying opportunities reverse the profitability ranking among firms? (iii) Under what condition is the conventional wisdom that highly concentrated industries tend to obtain more protection valid? The answers depend on various measures of comparative advantage in lobbying and on the demand curve.
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