Political Power and Market Power
Does market power lead to political power? This longstanding question, raised by Louis Brandeis in 1914, remains strikingly relevant today. As industries become more concentrated, firms not only shape markets but also seek to influence the regulatory and political landscape. In our study, Political Power and Market Power, we examine this connection using detailed data […]
Bo Cowgill is an Assistant Professor at Columbia Business School, Andrea Prat is the Richard Paul Richman Professor of Business at Columbia Business School, and Tommaso M. Valletti is a Professor of Economics at Imperial College London. This post is based on their recent paper.
Does market power lead to political power? This longstanding question, raised by Louis Brandeis in 1914, remains strikingly relevant today. As industries become more concentrated, firms not only shape markets but also seek to influence the regulatory and political landscape. In our study, Political Power and Market Power, we examine this connection using detailed data on U.S. mergers, lobbying expenditures, and campaign contributions over two decades. Our findings suggest that corporate consolidation is often followed by a significant and persistent increase in political influence activities, with implications for policy and governance.
