Problem
Consider this: The FDA, FTC, or some other agency is proposing a regulation that would hurt the sales of one of the products your company produces. The agency believes that there is a long-run consumer health issue that it should address. You estimate the regulation will cost your company $40 million a year in sales and $4 million a year in profits. The three other firms in the industry that make a similar product will likewise be hurt. Your Washington representative tells you that if all four firms are willing to spend $7 million in lobbying efforts it can get Congress to kill the proposed regulation. All other firms agree to help foot the bill. This kind of lobbying is common.
Answer the following questions:
a) Should you pay to help get the regulation killed?
b) If consumers think agencies such as the FTC prevent unfair and deceptive practices (like what your firm is considering doing), will they become less careful in watching out for themselves, thereby encouraging more bad business practices?