Title: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy - Center for American Progress
Headings: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
Rent-seeking
A modern example: Tesla Motors
Campaign finance, lobbying, and influence
Campaign contributions lead to policy outcomes
Lobbying leads to policy outcomes
Conclusion

Content: Tesla Motors
One clear case of modern rent-seeking is car dealers’ attempts to prevent Tesla, the maker of premium electric vehicles, from entering local markets. This has occurred through car dealers and their lobbyists seeking to enact or strengthen state laws that require cars to be sold through dealerships rather than directly from manufacturers. Car dealers claim that these regulations allow for easier comparison shopping and protect consumers in ways that a car manufacturer would not. Car dealers in New Jersey partnered this argument with nearly $700,000 in campaign contributions to New Jersey lawmakers from 2003 to 2009, with another $155,000 spent on lobbying in 2013 alone. Unfortunately for Tesla, their business model does not currently include independent car dealers. Instead, Tesla sells cars directly to customers, cutting out an intermediary that the company believes will not sell their cars as effectively. Incumbent car dealers, through their lobbying efforts, are both protecting their place in the car market and raising the costs of a new competitor. For a new firm such as Tesla to enter a market, it would either have to go through an incumbent dealership that it