The Distributional Effects of Lobbying (LEM Working Paper)
How can firms influence the underlying economic structure in which they operate? To address this question we modify an heterogeneous firms model of monopolistic competition to include a lobbying game. In this setup, the market entry fee and the operating fixed cost are chosen by a non-benevolent policymaker that weights the potentially suboptimal welfare level its choice of policy entails against the political contributions it receives from special interest groups, a common agency problem. We identify differing policy objectives along the firm distribution which correspond to three distinct political scenarios. We describe the ex-ante market conditions that give rise to each case, characterize the resulting equilibrium policy induced by lobbying activity and contrast this political equilibrium with the baseline economy. Our results explain the reported link between lobby composition and levels of concentration within an industry, describe a political mechanism through which firms and policymakers are able to collude and capture economic rents and shed light on two outstanding puzzles in the literature - on the one hand, political contributions’ apparent lack of an effect on firms’ economic outcomes, and on the other, the increasing levels of concentration recently observed among industries in the American economy.
Presented at: EPCS 2022 Meeting (Braga, Portugal)
Foreign Workers and Indirect Exports: Evidence from Viet Nam - Together with Léa Marchal and Claire Naiditch. (LEM Working Paper)
This paper studies how skilled foreign workers affect firms’ export mode. We build a model with heterogeneous firms, incorporating trade intermediaries and foreign workers, and analyse how these workers affect firms’ choice to export directly, indirectly or not at all. We show that foreign workers help firms relax productivity constraints to export, both directly and indirectly. This pro-trade effect is larger for highly productive firms that export directly. Using the 2010 UNIDO Viet Nam Investor Survey, we find evidence of the pro-trade effect of skilled foreign workers and their asymmetric impact across firms of different sizes.
Presented at: 13th International Conference "Economics of Global Interactions: New Perspectives on Trade, Factor Mobility and Development" (Bari, Italy)
Works in Progress
Do Political Contributions Affect Concentration? Evidence from the United States