Market competition, lobbying influence and environmental externalities

Marco Catola, Simone D'Alessandro*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

9 Citations (Web of Science)


In this paper, we contribute to the debate regarding the relationship between lobbying and environmental regulation by explicitly taking into account the role of market competition. We analyse how the number of firms affects both the effectiveness of lobbying in fighting environmental regulation and the individual incentive for firms to switch to green technology. To explore this issue, we present a Cournot oligopoly where firms can choose between abating the environmental externality or lobbying the government to hold a loose regulation. We investigate two alternative government's political objectives. In the first, government aims to only minimise the externality, while in the second, it also cares about the consumers surplus. We find that, in both cases, the higher the number of firms, the higher the incentive to abate. However, while in the first case, either both types of firms coexist or all firms switch to be green, in the other case, there exists a minimum the number of firms below which all firms remain polluting.

Original languageEnglish
Article number101886
Number of pages17
JournalEuropean Journal of Political Economy
Publication statusPublished - Jun 2020
Externally publishedYes

JEL classifications

  • d72 - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • l13 - Oligopoly and Other Imperfect Markets
  • l51 - Economics of Regulation


  • Lobbying
  • Interest group
  • Regulation
  • Pollution

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