Does a firm’s lobbying activity respond to its peers’ lobbying activity?

Abstract

Classic theoretical works of lobbying emphasise the importance of competition among interest groups to compete for resources, but empirical evidence of competitive forces in firms’ lobbying activities is limited. This study investigates how firms’ lobbying activities respond to peer lobbying. We show that firms increase their lobbying as their peers increase their lobbying. Such positive effects are stronger for larger firms and firms in more regulated industries. Aside from actively lobbying firms, non-lobbying firms are also more likely to start lobbying when their peers increase their lobbying. Lastly, we observe that Republican-leaning (Democrat-leaning) firms respond to the increase in lobbying by other Republican-leaning (Democrat-leaning) firms.