The relevance of special interests lobbying in modern democracies can hardly be questioned. But if large trade associations can overcome the free riding problem and form effective lobbies, why do they not also threaten market competition by forming equally effective cartels? We argue that the key to understanding the difference lies in supply elasticity. The group discipline, which works in the case of lobbying, can be effective in sustaining a cartel only if increasing output is sufficiently costly—otherwise the incentive to deviate is too great. The theory helps organizing a number of stylized facts within a common framework.

Trade Associations: Why Not Cartels?

Mattozzi A;Modica S
2021

Abstract

The relevance of special interests lobbying in modern democracies can hardly be questioned. But if large trade associations can overcome the free riding problem and form effective lobbies, why do they not also threaten market competition by forming equally effective cartels? We argue that the key to understanding the difference lies in supply elasticity. The group discipline, which works in the case of lobbying, can be effective in sustaining a cartel only if increasing output is sufficiently costly—otherwise the incentive to deviate is too great. The theory helps organizing a number of stylized facts within a common framework.
2021
Levine D K; Mattozzi A; Modica S
File in questo prodotto:
File Dimensione Formato  
iere.12487.pdf

Open Access dal 01/10/2022

Tipo: Postprint
Licenza: Licenza per accesso libero gratuito
Dimensione 508.23 kB
Formato Adobe PDF
508.23 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/853531
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 0
  • ???jsp.display-item.citation.isi??? 1
social impact