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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.

Suggested Citation

  • Thomas P. Lyon & John W. Maxwell, 2004. "Astroturf: Interest Group Lobbying and Corporate Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 561-597, December.
  • Handle: RePEc:bla:jemstr:v:13:y:2004:i:4:p:561-597
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    References listed on IDEAS

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    1. repec:cup:apsrev:v:87:y:1993:i:02:p:319-333_09 is not listed on IDEAS
    2. 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, March.
    3. 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.
    4. Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 583-617, October.
    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. 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.
    7. 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.
    8. Robert Aumann & Adam Brandenburger, 2014. "Epistemic Conditions for Nash Equilibrium," World Scientific Book Chapters,in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 5, pages 113-136 World Scientific Publishing Co. Pte. Ltd..
    9. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    10. 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, March.
    11. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
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    Cited by:

    1. Mary-Hunter McDonnell, 2016. "Radical Repertoires: The Incidence and Impact of Corporate-Sponsored Social Activism," Organization Science, INFORMS, vol. 27(1), pages 53-71, February.
    2. Sébastien Mena & Daniel Waeger, 2014. "Activism for Corporate Responsibility: Conceptualizing Private Regulation Opportunity Structures," Journal of Management Studies, Wiley Blackwell, vol. 51(7), pages 1091-1117, November.
    3. 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.
    4. Bonardi, Jean-Philippe & Cadot, Olivier & Cottier, Lionel, 2016. "Extremists into Truth-tellers: Information Aggregation under Asymmetric Preferences," CEPR Discussion Papers 11118, C.E.P.R. Discussion Papers.
    5. 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, September.
    6. repec:gam:jscscx:v:8:y:2019:i:2:p:38-:d:201325 is not listed on IDEAS
    7. Allard Made, 2014. "Information Provision by Interest Groups," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(4), pages 649-664, August.
    8. Thomas P. Lyon & John W. Maxwell, 2008. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 240-260, Summer.
    9. Archishman Chakraborty & Rick Harbaugh, 2010. "Persuasion by Cheap Talk," American Economic Review, American Economic Association, vol. 100(5), pages 2361-2382, December.
      • Archishman Chakraborty & Rick Harbaugh, 2006. "Persuasion by Cheap Talk," Working Papers 2006-10, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy, revised Oct 2009.
    10. Bonardi, Jean-Philippe, 2008. "The internal limits to firms' nonmarket activities," MPRA Paper 14500, University Library of Munich, Germany.
    11. Mireille Chiroleu-Assouline & Thomas P. Lyon, 2016. "Merchants of Doubt: Corporate Political Influence when Expert Credibility is Uncertain," Working Papers 2016.28, FAERE - French Association of Environmental and Resource Economists.
    12. 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.
    13. Thomas P. Lyon & John W. Maxwell, 2011. "Greenwash: Corporate Environmental Disclosure under Threat of Audit," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(1), pages 3-41, March.
    14. Nicolas Dahan & Jonathan Doh & Jonathan Raelin, 2015. "Pivoting the Role of Government in the Business and Society Interface: A Stakeholder Perspective," Journal of Business Ethics, Springer, vol. 131(3), pages 665-680, October.

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