¬ã°Q¤é´Á

2010¦~11¤ë20¤é10:20 ~ 13:00

¬ã°Q¦aÂI

¥xÆW¤j¾ÇªÀ·|¬ì¾Ç°|   ²Ä26±Ð«Ç

ÃD¥Ø

Lobby competition and standardization union

§@ªÌ

±ç¤åºa

ªL®Ë¦p

³¯¨Ø¹a

¤åÄm¥X³B

Working Paper

³ø§i¤H

ªL®Ë¦p

°Ñ¥[¤H­û

¶ÀÂE    ªL¿P²Q    ¤ý¥ú¥¿    ½²©úªÚ    °ª°ê®p    ³¯§»©ö    凃¥ú»õ    ´^¥¿¯E    ¼B«G§g    ¤B§»¤¯    ªL®Ë¦p    ±ä¥j¾s    ±i·ç¶³    ²ø´_½å    ®}¹t

ºK­n

This paper extends the standardization union model developed by Gandal and Shy (2001) by introducing the technique of the analysis on tax competition by Haufler and Wooton (1999) to explore lobby competition in forming a standardization union. Assume that the economy consists of three countries and that each country has a circular city market as the one developed by Salop (1979). Assume further that each country has a firm producing a horizontally differentiated product so that the three firms engage in Bertrand price competition and compete in the circular city market of each country. In this model, two of the three firms strive for lobbying their governments with campaign contributions to form a standardization union so that the non-member firm is force to incur a conversion cost while selling its product to the markets of these two countries. On the contrary, the non-member firm will try its best to lobby these two governments with campaign contributions for preventing them from forming a union.

The game in question consists of three stages. Firms engage in lobby competition to determine the maximal amount of campaign contributions that the member firms can offer for lobbying the governments to form a standardization union or that the non-member firm can provide for preventing them from forming a union in the first stage. Then, the governments decide whether or not to form a standardization union in the second stage. Finally, firms engage in Bertrand price competition in the markets of the three countries in the third stage.

The main findings of the paper are as follows. First of all, we find that the lobby premium can be of either positive or negative depending on the magnitude of the conversion costs. It is positive if the conversion costs are relatively small, say, t £ 5/4, while are negative, otherwise. Secondly, both the maximum campaign contributions of the member and nonmember firms are increasing in the conversion costs t. The maximum campaign contributions for the nonmember firm is larger (smaller) than that for the member firms as t < (>) 2. Thirdly, when the conversion costs are small, say, t < 5/4, the member firms will fail to lobby the governments to form a standardization union, while the non-member firm will succeed in lobbying the governments to prevent from forming a union so that its optimal campaign contribution equals Cg* = [2-(2/25)(5-2t)2]. Lastly, when conversion costs are large, say, t Î[5/4, (5/2)(8+a)/(15+2a)], the non-member firm will definitely succeed in lobbying the governments to prevent from forming a union so that its optimal campaign contribution equals Cg* = (1/25)[2t2(1+2a)-5t(a-4t)].

³Æµù