Review of Industrial Organization

, Volume 5, Issue 1, pp 1–29 | Cite as

Market structure, opportunity costs, and tax avoidance

  • Jeffrey P. Baldani
  • Don E. Waldman


There have been several studies examining the relationship between an industry's market structure and its ability to affect political outcomes. These studies have assumed that political outcomes are likely to be influenced by a variety of traditional market structure characteristics, but these studies have ignored the impact of differences in the opportunity cost of lobbying that undoubtedly exist across industries. A model is developed that directly incorporates the opportunity cost of lobbying for tax breaks. Using data on tax avoidance rates in 1963, it is then suggested that in industries with high opportunity costs of lobbying, fewer tax benefits were received.


Structure Characteristic Opportunity Cost Industrial Organization Market Structure Traditional Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Caves, Richard E. "Economic Models of Political Choice: Canada's Tariff Structure."Canadian Journal of Economics, 9 (1976): 278–300.Google Scholar
  2. Comanor, William S. and Thomas A. Wilson. "Advertising Market Structure and Performance."Review of Economics and Statistics, 49 (1967): 423–440.Google Scholar
  3. Coolidge, Cathleen and Gordon Tullock. "Firm Size and Political Power," in John J. Siegfried, ed.,The Economics of Firm Size, Market Structure and Social Performance. (Washington: Government Printing Office, 1980).Google Scholar
  4. Esty, Daniel C. and Richard E. Caves. "Market Structure and Political Influence: New Data on Political Expenditures, Activity, and Success."Economic Inquiry, 21 (1983): 24–38.Google Scholar
  5. Greer, Douglas F.Industrial Organization and Public Policy. (New York: Macmillan, 1984).Google Scholar
  6. Hayes, Michael T.Lobbyists & Legislators. (New Brunswick, NJ: Rutgers University Press, 1981).Google Scholar
  7. Masters, F. Marick and Gerald D. Keim. "Determinants of PAC Participation Among Large Corporations."Journal of Politics, 47 (1985): 1158–1173.Google Scholar
  8. McPherson, Charles P.Tariff Structures and Political Exchange. Ph.D. Dissertation, University of Chicago, 1972.Google Scholar
  9. Noam, Eli. "Market Power and Regulation: A Simultaneous Approach."Journal of Industrial Economics, 32 (1984): 335–347.Google Scholar
  10. Olson, Mancur.The Logic of Collective Action. (Cambridge, Mass.: Harvard University Press, 1965).Google Scholar
  11. Pincus, J.J. "Pressure Groups and the Pattern of Tariffs."Journal of Political Economy, 83 (1975): 757–778.Google Scholar
  12. Rose, John T. "Aggregate Concentration in Banking and Political Leverage: A Suggested Methodology." Unpublished Paper, Board of Governors of the Federal Reserve System, 1976.Google Scholar
  13. Salamon, Lester and John J. Siegfried. "Economic Power and Political Influence: The Impact of Industry Structure on Public Policy."American Political Science Review, 71 (1977): 1026–1043.Google Scholar
  14. Scherer, F.M.Industrial Market Structure and Economic Performance. (Chicago: Rand McNally, 1980).Google Scholar
  15. ——. "Using Linked Patent and R&D Data to Measure Interindustry Technology Flows," in Zvi Griliches, ed.,R&D, Patents and Productivity. (Chicago: University of Chicago, 1984).Google Scholar
  16. Siegfried, John J., ed.The Economics of Firm Size, Market Structure and Social Performance. (Washington: Government Printing Office, 1980).Google Scholar
  17. ——The Relationship Between Economic Structure and the Effect of Political Influence: Empirical Evidence from the Federal Corporation Income Tax. (Ann Arbor: Michigan: University Microfilms, Inc., 1973).Google Scholar
  18. Williamson, Oliver. "Discretionary Power of Large Firms: Commentary," in John J. Siegfried, ed.,The Economics of Firm Size, Market Structure and Social Performance. (Washington: Government Printing Office, 1980).Google Scholar

Copyright information

© Industrial Organization Society University of Southern Indiana 1990

Authors and Affiliations

  • Jeffrey P. Baldani
    • 1
  • Don E. Waldman
    • 1
  1. 1.Colgate UniversityUSA

Personalised recommendations