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Title: Towards a Political Theory of the Firm

Author(s): Luigi Zingales

Publication Date: July 2017

Keyword(s): Concentration, Lobbying and Theory of the firm

Programme Area(s): Financial Economics

Abstract: Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a â??Medici vicious circle, where money is used to get political power and political power is used to make money.

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Bibliographic Reference

Zingales, L. 2017. 'Towards a Political Theory of the Firm'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12158