Do Corporate PACs Restrict Competition?

Corporate political action committees (PACs) play a prominent role in the political strategies of U.S. organizations, and the ability of firms to influence political outcomes is highly controversial. To the extent that PACs enable groups of firms to pursue corporate agendas at the expense of the social good, they promote socially suboptimal outcomes. This study examines the impact of corporate PACs on entry restriction in manufacturing industries and finds a negative relationship between corporate PAC spending and the entry of new firms. Results suggest that PACs are used to shape industry structure to the economic benefit of incumbents.