The Market for Legislative Influence over Regulatory Policy

Abstract

We show that in the US telecommunications industry market participants have a sophisticated understanding of the political process, and behave strategically in their allocation of contributions to state legislators as if seeking to purchase influence over regulatory policy. We find that interests respond defensively to contributions from rivals, take into account the configuration of support available to them in both the legislature and the regulatory commission, and vary their contributions according to variations in relative costs for influence by different legislatures. This strategic behavior supports a theory that commercially motivated interests contribute campaign resources in order to mobilize legislators to influence the decisions of regulatory agencies. We also report evidence that restrictions on campaign finance do not affect all interests equally. The paper therefore provides positive evidence on the nature and effects of campaign contributions in regulated industries where interest group competition may be sharp.

Corporate Political Strategy in Contested Regulatory Environments

“…A unique feature of this setting is that we are able to construct a precise measure of the degree of expected stakeholder opposition specific to each firm, and its variation over an extended time period. Prior studies of stakeholder opposition in regulatory arenas have relied on state-level measures, implicitly assuming that all firms in a state face similar levels of opposition (Bonardi et al 2006, Fremeth and Holburn 2012, de Figueiredo and Edwards 2016. Our data reveals there is significant firm-level heterogeneity in stakeholder opposition within a jurisdiction and over time, which we are able to leverage in our statistical analysis to identify the impact on firms' political strategies.…”

High finance, political money and the US Congress: a quantitative assessment of the campaign to roll back Dodd–Frank

“…That focuses on individual markets for particular outcomes in the context of formal political structures that are largely taken as given, not constrained by the kinds of broad social and economic forces and coalition building that figure in studies of partisan political realignments and 10 ( Krozner and Stratmann 1998); see also their various separate pieces. 11 For a review of that literature, though covering more industries than finance, see, e.g., (de Figuerido and Edwards 2015). 12 (Ferguson 2014) places the 1994 effort in precisely this context; more broadly on the Clinton administration, deregulation, and political money, see (Ferguson and Johnson 2009a) and (Ferguson and Johnson 2009b).…”