DP12158 Towards a Political Theory of the Firm
|Publication Date:||July 2017|
|Keyword(s):||Concentration, Lobbying, Theory of the firm|
|JEL(s):||D21, G30, L20|
|Programme Areas:||Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=12158|
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.