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Market-Based Lobbying: Evidence from Advertising Spending in Italy

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<mark>Journal publication date</mark>31/01/2016
<mark>Journal</mark>American Economic Journal: Applied Economics
Issue number1
Volume8
Number of pages33
Pages (from-to)224-256
Publication StatusPublished
<mark>Original language</mark>English

Abstract

We analyze a novel lobbying channel: firms shifting spending toward a politician's business in the hope of securing favorable regulation. We examine the evolution of advertising spending in Italy during 1993-2009, a period in which Berlusconi was in power three separate times, while maintaining control of Italy's major private television network, Mediaset. We document a significant pro-Mediaset bias in the allocation of advertising during Berlusconi's political tenure, especially for companies in more regulated sectors. We estimate that Mediaset profits increased by one billion euros during this period and that regulated firms anticipated sizeable returns, stressing the economic importance of this channel.