Regulation as Incumbent Protection

This is a great example of a point I often make about regulation aiding incumbents and large companies against smaller companies and upstarts.  From the DC Examiner, via Radley Balko

Philip Morris, openly and without qualification, backs Kennedy's and Waxman's bills to heighten regulation of tobacco.

Philip Morris stands to benefit from this regulation in many ways. First, all regulation adds to overhead, and thus falls more heavily on smaller firms. Second, restrictions on advertising help Philip Morris' Marlboro, a brand everyone already knows, by keeping lesser-known brands in the shadows. (Existing restrictions on advertising have already helped Philip Morris in this regard, with an added benefit spelled out in Altria's annual report: "Marketing and selling expenses were lower, reflecting regulatory restrictions on advertising and promotion activities. "¦ ")

Finally, if the bill passes and the FDA gets added control over the industry, Philip Morris, more than any of its competitors, will have access to those bureaucrats and agency heads making the decisions. For all these reasons, RJ Reynolds and other tobacco companies oppose the bills Kennedy and Waxman are pushing.

  • Ian Random

    I couldn't agree more. I often wonder if the sign that you won't be affected by the regulation, is that you can hire someone full time to deal with it and still remain profitable. Assuming that $50K/year will buy that expertise, that is a pittance against millions in profits, but significant for start-ups.

  • Shenpen

    "often wonder if the sign that you won’t be affected by the regulation, is that you can hire someone full time to deal with it and still remain profitable."

    I agree, and I have to point out that I'm not an Objectivist at all, I consider Ayn Rand an uneducated unphilosopher, but it still sounds frighteningly like as if the Atlas Shrugged stuff was correct.