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Astroturf: Interest Group Lobbying and Corporate Strategy

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  • Thomas P. Lyon
  • John W. Maxwell

Abstract

We study three corporate nonmarket strategies designed to influence the lobbying behavior of other special interest groups: (1) astroturf, in which the firm covertly subsidizes a group with similar views to lobby when it normally would not; (2) the bear hug, in which the firm overtly pays a group to alter its lobbying activities; and (3) self-regulation, in which the firm voluntarily limits the potential social harm from its activities. All three strategies reduce the informativeness of lobbying, and all reduce the payoff of the public decision-maker. We show that the decision-maker would benefit by requiring the public disclosure of funds spent on astroturf lobbying but that the availability of alternative influence strategies limits the impact of such a policy. Copyright Blackwell Publishing 2004.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 13 (2004)
Issue (Month): 4 (December)
Pages: 561-597

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Handle: RePEc:bla:jemstr:v:13:y:2004:i:4:p:561-597

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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References

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  1. Aumann, Robert & Brandenburger, Adam, 1995. "Epistemic Conditions for Nash Equilibrium," Econometrica, Econometric Society, vol. 63(5), pages 1161-80, September.
  2. Drew Fudenberg & Jean Tirole, 1986. "A "Signal-Jamming" Theory of Predation," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 366-376, Autumn.
  3. Livio D. DeSimone & Frank Popoff, 2000. "Eco-Efficiency: The Business Link to Sustainable Development," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262541092, December.
  4. Lyon, Thomas P. & Maxwell, John W., 2003. "Self-regulation, taxation and public voluntary environmental agreements," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1453-1486, August.
  5. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
  6. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  7. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
  8. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
  9. John W. Maxwell & Thomas P Lyon & Steven C.. Hackett, 1995. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," University of Chicago - George G. Stigler Center for Study of Economy and State 122, Chicago - Center for Study of Economy and State.
  10. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November.
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Cited by:
  1. Lawton, Thomas & Rajwani, Tazeeb & Doh, Jonathan, 2013. "The antecedents of political capabilities: A study of ownership, cross-border activity and organization at legacy airlines in a deregulatory context," International Business Review, Elsevier, vol. 22(1), pages 228-242.
  2. Santiago Urbiztondo & Jean‐Philippe Bonardi & Bertrand V. Quélin, 2013. "International Expansion, Diversification and Regulated Firm Nonmarket Strategy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 34(6), pages 379-396, 09.
  3. Thomas P. Lyon & John W. Maxwell, 2007. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Working Papers 2007-16, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  4. Thomas P. Lyon & John W. Maxwell, 2006. "Greenwash: Corporate Environmental Disclosure under Threat of Audit," Working Papers 2006-07, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  5. Charles Cho & Martin Martens & Hakkyun Kim & Michelle Rodrigue, 2011. "Astroturfing Global Warming: It Isn’t Always Greener on the Other Side of the Fence," Journal of Business Ethics, Springer, vol. 104(4), pages 571-587, December.
  6. Bonardi, Jean-Philippe, 2008. "The internal limits to firms' nonmarket activities," MPRA Paper 14500, University Library of Munich, Germany.

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