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Market structure and campaign contributions: Does concentration matter? A reply

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Conclusion

Economic rents may be obtained through the process of market competition or be obtained by resorting to governmental protection. Rational firms choose the least costly alternative. Collusion to obtain governmental protection will be less costly, the higher the concentration, ceteris paribus. However, high concentration in itself is neither necessary nor sufficient to induce governmental protection.

The result that rent-seeking activity is triggered when firms are affected by government regulation has a clear implication: to reduce rent-seeking waste, governmental interference in the market place needs to be attenuated. Pittman's suggested approach, however, is ‘to maintain a vigorous antitrust policy’ (p. 181). In fact, a more strict antitrust policy may exacerbate rent-seeking. For example, the firms which will be affected by a vigorous application of antitrust laws would have incentive to seek moderation (or rents) from Congress or from the enforcement officials.

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References

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Authors and Affiliations

  1. Department of Management, Texas A&M University, 77843, College Station, TX

    Asghar Zardkoohi

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  1. Asghar Zardkoohi
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I am grateful for helpful discussions with Mike Pustay and Gerry Keim.

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Zardkoohi, A. Market structure and campaign contributions: Does concentration matter? A reply. Public Choice 58, 187–191 (1988). https://doi.org/10.1007/BF00125723

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  • DOI: https://doi.org/10.1007/BF00125723

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