Voting Makes Entrepreneurship Invariant to Lobbying

Anti-competitive lobbying by incumbents is widely believed to discourage entrepreneurship. In which case, why is there no robust cross-country evidence of a relationship between lobbying and entrepreneurship? To resolve this puzzle we propose a voting model in which social returns from entrepreneurship induce the median voter to vote for pro-entrepreneurship policies. We identify factors affecting lobbying expenditures, and predict that incumbent lobbying that weakens pro-entrepreneurship policy may be neutralized by a forward-looking median voter --- without removing the incentive among incumbent firms to lobby. Corporate social responsibility initiatives modify this prediction