Small Businesses and Lobbying

Lobby is an act we primarily associate with the largest corporations of America. Corporations that can spend hundreds of thousands of dollars to get a tax break, but even small businesses utilize lobbying. A problem for small businesses though is that lobbying isn’t cheap. $5,000 to $20,000 a month with an expectation that the lobbying effort may last more than a year or could fail is the contract you make when you hire a lobbyist.  To afford these efforts, small businesses have set aside competitive interests and worked together. There is a very real risk of free riding which is why industries like the expediters in New York City are only a group of seven. Expediters are paid by contractors to get various building permits approved and don’t work well with together in a competitive market, but after legislation that was threatening to end their businesses appeared they were able to quickly construct a coalition to pool lobbying efforts.

Simply put, rival companies can and do work together to when the legislative agenda is contrary to their business model. This matter can be further explained using Becker’s policies on pressure groups. On a local government level, the total taxes and subsidies being debated are small enough where local owners can spend, m, a meaningful amount for significant pressure, p. The national policies are dealing with numbers of far greater magnitudes of which small businesses don’t have the resources to apply significant pressure. Secondly, the glossed-over variable, ‘x,’ got mentioned, as Legislatives are instrumentalist institutions. This factors in considerably when thinking of the cost of influence. For example, the film industry in NYC wanted a tax credit and after one year had received a 10% credit but this did little to increase business so next year they went and secured a 30% credit which was the ultimate goal. This makes the cost of influence significantly higher even in our democratic system when we look at it from the end goal perspective.