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Private Politics and Public Regulation

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  • Georgy Egorov
  • Bård Harstad

Abstract

We develop a dynamic game to explore the interaction between regulation and private policies, such as self-regulation by firms and activism. Without a public regulator, the possibility of self-regulation is bad for the firm, but good for activists who are willing to maintain a costly boycott to raise the likelihood of self-regulation. Results are reversed when the regulator is present: the firm then self-regulates to preempt public regulation, while activists start and continue boycotts to raise the likelihood of such regulation. Our analytical results describe when a boycott is likely, and when it may be expected to be short and/or successful. The model generates a rich set of testable comparative statics.

Suggested Citation

  • Georgy Egorov & Bård Harstad, 2013. "Private Politics and Public Regulation," NBER Working Papers 19737, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19737
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    Cited by:

    1. Shi, Wei & Wei, Jingran, 2023. "In the crossfire: Multinational companies and consumer boycotts," China Economic Review, Elsevier, vol. 77(C).
    2. Dorothée Brécard & Mireille Chiroleu-Assouline, 2020. "The market for "harmful component-free" products under pressure from the NGOs," PSE Working Papers halshs-02878337, HAL.
    3. Julien Daubanes & Jean-Charles Rochet, 2019. "The Rise of NGO Activism," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 183-212, November.
    4. Grzegorz Zasuwa, 2019. "The Role of Individual- and Contextual-Level Social Capital in Product Boycotting: A Multilevel Analysis," Sustainability, MDPI, vol. 11(4), pages 1-16, February.
    5. Yaru Tang & Mengdi Liu & Fan Xia & Bing Zhang, 2024. "Informal regulation by nongovernmental organizations enhances corporate compliance: Evidence from a nationwide randomized controlled trial in China," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(1), pages 234-257, January.
    6. Yi Zheng, 2020. "Non-organized boycott: alliance advantage and free riding incentives in uneven wars of attrition," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 123-141, March.
    7. Chiroleu-Assouline, Mireille & Lambert-Mogiliansky, Ariane, 2023. "Radical activism and self-regulation: An optimal campaign mechanism," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    8. Philipp Herkenhoff & Sebastian Krautheim, 2018. "The International Organization of Production in the Regulatory Void," CESifo Working Paper Series 6922, CESifo.
    9. Fabrice Etilé, 2019. "The Economics of Diet and Obesity: Public Policy," PSE-Ecole d'économie de Paris (Postprint) hal-02154445, HAL.
    10. Julien Daubanes & Jean-Charles Rochet, 2013. "Activists versus Captured Regulators," CESifo Working Paper Series 4444, CESifo.
    11. Jarke-Neuert, Johannes & Perino, Grischa & Schwickert, Henrike, 2021. "Free-Riding for Future: Field Experimental Evidence of Strategic Substitutability in Climate Protest," SocArXiv sh6dm, Center for Open Science.
    12. Hirose, Kosuke & Matsumura, Toshihiro, 2022. "Common ownership and environmental Corporate Social Responsibility," Energy Economics, Elsevier, vol. 114(C).
    13. Hirose, Kosuke & Matsumura, Toshihiro, 2017. "Emission Cap Commitment versus Emission Intensity Commitment as Self-Regulation," MPRA Paper 82564, University Library of Munich, Germany.
    14. Prieur, Fabien & Zou, Benteng, 2018. "Climate politics: How public persuasion affects the trade-off between environmental and economic performance," Mathematical Social Sciences, Elsevier, vol. 96(C), pages 63-72.
    15. Cust, James & Harding, Torfinn & Krings, Hanna & Rivera-Ballesteros, Alexis, 2023. "Public governance versus corporate governance: Evidence from oil drilling in forests," Journal of Development Economics, Elsevier, vol. 163(C).
    16. Deka, Anubrata & Yiannaka, Amalia & Giannakas, Konstantinos, 2021. "The Economic Impacts of Private Politics and Corporate Social Responsibility on Food Fraud," 2021 Annual Meeting, August 1-3, Austin, Texas 314030, Agricultural and Applied Economics Association.
    17. David P. Baron, 2016. "Self‐Regulation and the Market for Activism," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 584-607, September.
    18. Mathias Dewatripont & Jean Tirole, 2022. "The Morality of Markets," Working Papers ECARES 2022-35, ULB -- Universite Libre de Bruxelles.
    19. Zijun Luo & Yonghong Zhou, 2020. "Decomposing the effects of consumer boycotts: evidence from the anti-Japanese demonstration in China," Empirical Economics, Springer, vol. 58(6), pages 2615-2634, June.
    20. David A. Dana & Janice Nadler, 2019. "Regulation, Public Attitudes, and Private Governance," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 16(1), pages 69-93, March.
    21. David P. Baron & Margaret Neale & Hayagreeva Rao, 2016. "Extending Nonmarket Strategy: Political Economy and the Radical Flank Effect in Private Politics," Strategy Science, INFORMS, vol. 1(2), pages 105-126, June.
    22. Fabien Prieur & Benteng Zou, 2017. "On the impact of indirect competition for political influence on environmental policy," DEM Discussion Paper Series 17-16, Department of Economics at the University of Luxembourg.
    23. Herkenhoff, Philipp & Krautheim, Sebastian, 2022. "The international organization of production in the regulatory void," Journal of International Economics, Elsevier, vol. 137(C).
    24. Grzegorz Zasuwa & Agnieszka Marek & Grzegorz Wesolowski & Joanna Niewiadoma, 2020. "Consumer Activism in Times of Economic Crisis and Recovery: A Cross-Country aAnalysis of the Role of Social Capital in Boycotting Products," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 928-938.

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    More about this item

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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