The Dynamics of Firm Lobbying

How is economic policy made? In this paper we study a key determinant of the answer to the question: lobbying by fi…rms. Estimating a binary choice model of …firm behavior, we fi…nd signifi…cant evidence for the idea that barriers to entry induce persistence in lobbying. The existence of these costs is further confi…rmed in studying how fi…rms responded to a particular policy change: the expiration of legislation relating to the H-1B visa. Due to its influence on fi…rm behavior, we argue that this persistence fundamentally changes the environment in which legislation is made.