The Market for Legislative Influence over Regulatory Policy

Strategy Beyond Markets

ISBN: 978-1-78635-020-6, eISBN: 978-1-78635-019-0

ISSN: 0742-3322

Publication date: 3 May 2016


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.




The authors are grateful to for the provision of data; and David Baron, Dino Falaschetti, Paul Gertler, Anne Karing, Orie Shelef, Jason Snyder, Pablo Spiller, Richard Vanden Bergh and seminar participants at the ISNIE conference and UC Berkeley Political Economy seminar for helpful suggestions. All faults are solely the authors’. The author order is alphabetical and does not reflect relative contributions.


de Figueiredo, R. and Edwards, G. (2016), "The Market for Legislative Influence over Regulatory Policy", Strategy Beyond Markets (Advances in Strategic Management, Vol. 34), Emerald Group Publishing Limited, pp. 193-232.

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