Market-Based Lobbying: Evidence from Advertising Spending in Italy
American Economic Journal: Applied Economics
vol. 8,
no. 1, January 2016
(pp. 224-56)
(Complimentary)
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. (JEL D72, L51, L82, M31)Citation
DellaVigna, Stefano, Ruben Durante, Brian Knight, and Eliana La Ferrara. 2016. "Market-Based Lobbying: Evidence from Advertising Spending in Italy." American Economic Journal: Applied Economics, 8 (1): 224-56. DOI: 10.1257/app.20150042Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- L51 Economics of Regulation
- L82 Entertainment; Media
- M31 Marketing
A note
During Berlusconi’s terms as prime minister, there was an increase of advertisements on Mediaset, his media company, and a change in the composition of spending with one class of companies (“regulated companies”) shifting their ads towards Berlusconi’s television channels. This behavior is presented by the authors as proof of their “key assumption”, i,e. the expectation of policy favors. By foregoing the search for other explanations, they miss a fairly plausible one. The authors exclude political considerations from their line of reasoning, but end up reaping a fruit of significant political importance, the measure of the increase of profits for Berlusconi’s networks.