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Nonmarket performance: Evidence from U.S. electric utilities

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  • Bonardi, Jean-Philippe
  • Holburn, Guy
  • Vanden Bergh, Rick

Abstract

Building on a framework that assesses the attractiveness of ‘political markets’ – where firms transact over public policies with government policy-makers – we develop hypotheses regarding the success or performance of firms’ nonmarket strategies. We propose that the ability of firms to gain more favorable policy outcomes is increasing in the degree of rivalry among elected politicians; the firm’s recent experience with policy-makers; and the opportunity to learn from other firms’ recent experiences; and is decreasing in the degree of rivalry from competing interest groups and the resource base of regulatory agencies. Using data on regulatory filings for rate increases made by the population of U.S. privately-owned electric utilities over a 13 year period, we find empirical support for our arguments.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14437.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:14437

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Related research

Keywords: Nonmarket strategy; lobbying; Electric utilities;

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References

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  1. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  2. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 243-77, Fall.
  3. Stephen Coate & Timothy Besley, 2000. "Elected versus Appointed Regulators: Theory and Evidence," NBER Working Papers 7579, National Bureau of Economic Research, Inc.
  4. Guy L. F. Holburn, 2004. "Influencing Agencies Through Pivotal Political Institutions," Journal of Law, Economics and Organization, Oxford University Press, vol. 20(2), pages 458-483, October.
  5. David P. Baron, 2001. "Theories of Strategic Nonmarket Participation: Majority-Rule and Executive Institutions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 47-89, 03.
  6. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
  7. Brian S. Silverman, 1999. "Technological Resources and the Direction of Corporate Diversification: Toward an Integration of the Resource-Based View and Transaction Cost Economics," Management Science, INFORMS, vol. 45(8), pages 1109-1124, August.
  8. North, D.C., 1990. "A Transaction Cost Theory of Politics," Papers 144, Washington St. Louis - School of Business and Political Economy.
  9. Weingast, Barry R & Moran, Mark J, 1983. "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 765-800, October.
  10. Dolton, P. J. & Makepeace, G. H., 1987. "Interpreting sample selection effects," Economics Letters, Elsevier, vol. 24(4), pages 373-379.
  11. John M. de Figueiredo & Brian S. Silverman, 2002. "Academic Earmarks and the Returns to Lobbying," NBER Working Papers 9064, National Bureau of Economic Research, Inc.
  12. Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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Citations

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Cited by:
  1. Bonardi, Jean-Philippe & Urbiztondo, Santiago & Quelin, Bertrand, 2008. "The political economy of international regulatory convergence in public utilities," MPRA Paper 14435, University Library of Munich, Germany.
  2. Kim, Jin-Hyuk, 2008. "Corporate Lobbying Revisited," MPRA Paper 51396, University Library of Munich, Germany.
  3. M. Maegli & C. Jaag & M. Finger, 2010. "Regulatory Governance Costs in Network Industries: Observations in Postal Regulation," Competition and Regulation in Network Industries, Intersentia, vol. 11(2), pages 207-238, June.
  4. Bonardi, Jean-Philippe, 2008. "The internal limits to firms' nonmarket activities," MPRA Paper 14500, University Library of Munich, Germany.
  5. Maegli, Martin & Jaag, Christian, 2009. "Regulatory Governance Costs in Network Industries: Implicatins for postal Regulation," MPRA Paper 15309, University Library of Munich, Germany.
  6. Jeffrey Macher & John Mayo, 2012. "The World of Regulatory Influence," Journal of Regulatory Economics, Springer, vol. 41(1), pages 59-79, February.
  7. Ozer, Mine, 2010. "Top management teams and corporate political activity: Do top management teams have influence on corporate political activity?," Journal of Business Research, Elsevier, vol. 63(11), pages 1196-1201, November.

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