Matteo Broso

We study the impact of market concentration on elections and lobbying in a political agency model with adverse selection and moral hazard. Two incumbent firms can lobby a politician (P) to prevent a pro-competitive reform. P's type determines whether they care about bribes or not. A representative voter tries to infer P's type monitoring the policymaking process. We investigate the welfare implications of a merger between the two firms. In equilibrium, the merger increases firms' incentives to lobby and their ability to influence politics. This additional political power reduces the chances that the pro-competitive reform is approved, hurting consumers; but it allows the voter to defeat a corruptible P with higher probability. Thus, it improves the voter's screening and mitigates adverse selection. We discuss how this new trade-off interacts with traditional competition considerations in the merger's assessment.

I study a product differentiation model with endogenous entry where a politically connected public firm competes with a private one. Consumers are heterogenous in their willingness to pay. First, I argue that because of political ties, the public firm may mimic the preferences of the consumer with the median type. Then, I show that as privatization increases, the market outcome shifts from an inefficient public monopoly to a duopoly, where the public firm can even be more profitable than the private one, and welfare is higher. However, full privatization is not socially optimal as it implies excessive product differentiation.

Men and women often sort into different jobs, and male-dominated jobs typically pay more than female-dominated ones. Why is that the case? We propose a model where workers have heterogeneous attitudes with respect to the social norms that define gender prescribed occupations and face endogenous social costs when entering jobs deemed "appropriate" for the other gender.
We show that: (i) workers trade off identity and wage considerations in deciding where to work; (ii) asymmetric social norms contribute to the gender pay gap by deterring women from entering higher-paying male-dominated sectors; (iii) breaking social norms generates positive externalities, reducing social stigma for everyone. Therefore, in equilibrium, there are too few social norm breakers.

Are politicians more likely to be corrupted when elections are contested and competitive? We propose a political agency model where an incumbent politician decides whether to accept bribes or not. Political competition operates along two margins. At the extensive margin, when the election is competitive, stronger challengers are more likely to enter the race. At the intensive margin, stronger challengers are more likely to defeat the incumbent, conditional on running. In equilibrium, the impact of political competition on bribes is non-monotonic. Corruption is lowest when elections are moderately competitive.

We study how closeness of elections affects campaign contributions from corporations. We develop a model in which a corporation can offer contributions to office-seeking political candidates in exchange for favors. The model predicts that candidates in close elections may receive more funding because of both demand and supply effects. We use U.S. House election data from 1974 to 2014, and leverage the quasi-random variation in districts' competitiveness induced by incumbents’ deaths, to provide empirical evidence supporting this claim. Preliminary results show that corporate campaign contributions increase in districts following an incumbent’s death relative to other districts in the same electoral cycle.

Coming soon