This paper analyzes the equilibrium levels of productions, profits, and lobbying expenditures by a domestic firm and a foreign firm in two-stage and three-stage lobbying games. We find that a domestic firm's production in three-stage game is greater than that in two-stage game and a foreign firm's production is smaller in three-stage game than that in two-stage game because of the first mover's advantage. However, a domestic firm 's profit in three-stage game can be less than that in two-stage game even though domestic firms make production decisions first. Actually, a domestic firm's profit depends on the number of domestic and foreign firms. We also find that the relative sizes of a domestic firm's lobbying expenditure, a foreign firm's lobbying expenditure and total lobbying expenditures in equilibria of two types of games also depend on the number of domestic and foreign firms.
Abstract
I. Introduction
II. The basic model
III. The simultaneous production decisions of domestic and foreign firms
IV. The sequential production decisions of domestic and foreign firms
V. Concluding remarks
References
(0)
(0)