Firm Lobbying in the European Union

Working Paper, 2021

Job Market Paper: The EU Single Market is the largest internal market worldwide in terms of GDP, and the EU has far-reaching policy competences, particularly as they pertain to the single market. Hence, policy stakes are high, and a wide array of actors try to exert influence on the EU level; firms in particular play a prominent role in this process. Yet, a systematic empirical account of the determinants and effects of firm lobbying in the EU is lacking. Leveraging novel data on firms’ meetings with the EU Commission, I first document that larger, more profitable, and more valuable companies lobby more and that firms strategically choose lobbying targets within the multi-level European political structure. I then explore the effects of firm lobbying in the EU. I employ an event study approach and a difference-in-differences design and show that stock markets value firm lobbying. Examining real-world outcomes, I demonstrate that firm lobbying is associated with companies receiving higher grant amounts from the EU Commission. I argue for a causal interpretation of this finding based on two instrumental variable designs. Further analyses imply that these results may generalize to the study of regulatory politics in the EU; lobbying companies may benefit from more favorable regulations. I discuss my findings against the backdrop of the literature, and argue that while lobbying in the EU context may best be viewed as informational rather than quid-pro-quo, i.e. companies provide policymakers information rather than resources, lobbying may nonetheless result in private benefits to firms.

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