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The Industrial Organization of Private Politics


  • Baron, David P.


Private politics social pressure is led by social activists who use confrontational and cooperative strategies to induce firms to provide social benefits. A confrontational activist demands that a firm change its practices and threatens a harmful campaign if it does not change. A cooperative activist uses its expertise to identify benefits from a change in practices or provides external legitimacy for a firm. The greater the threat from a confrontational activist the more aggressively the potential targets compete for an engagement with the cooperative activist. If firms would reject the demands of the confrontational activist, the cooperative activist chooses a socially responsible firm over a profit-maximizing firm, and the confrontational activist then campaigns against a profit-maximizing firm. If the threat is sufficiently strong that the firms would accept the demand of the confrontational activist, the cooperative activist is indifferent to which firm it chooses. Consequently, when campaigns are observed, profit-maximizing firms are matched with confrontational activists, and socially responsible firms are matched with cooperative activists. The threat of confrontation creates a positive externality for the cooperative activist, which has an incentive to contribute to the campaign of the confrontational activist.

Suggested Citation

  • Baron, David P., 2012. "The Industrial Organization of Private Politics," Quarterly Journal of Political Science, now publishers, vol. 7(2), pages 135-174, April.
  • Handle: RePEc:now:jlqjps:100.00011065
    DOI: 10.1561/100.00011065

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    Cited by:

    1. Sylvaine Poret, 2019. "Corporate–NGO Partnerships through Sustainability Labeling Schemes: Motives and Risks," Post-Print hal-02154666, HAL.
    2. Georgy Egorov & Bård Harstad, 2017. "Private Politics and Public Regulation," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1652-1682.
    3. 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.
    4. Nicolas Treich, 2018. "Veganomics : vers une approche économique du véganisme ?," Revue française d'économie, Presses de Sciences-Po, vol. 0(4), pages 3-48.
    5. Krautheim, Sebastian & Verdier, Thierry, 2016. "Offshoring with endogenous NGO activism," Journal of International Economics, Elsevier, vol. 101(C), pages 22-41.
    6. Romain Espinosa & Nicolas Treich, 2021. "Moderate Versus Radical NGOs†," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1478-1501, August.
    7. Sylvaine Poret, 2014. "Corporate-NGO partnerships in CSR activities: why and how?," Working Papers 2014-04, Alimentation et Sciences Sociales.
    8. Mireille Chiroleu‐Assouline & Thomas P. Lyon, 2020. "Merchants of doubt: Corporate political action when NGO credibility is uncertain," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 439-461, April.
    9. 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.
    10. Tim Kraft & Yanchong Zheng & Feryal Erhun, 2013. "The NGO's Dilemma: How to Influence Firms to Replace a Potentially Hazardous Substance," Manufacturing & Service Operations Management, INFORMS, vol. 15(4), pages 649-669, October.
    11. Espinosa, Romain & Treich, Nicolas, 2020. "Moderate vs. Radical NGOs," TSE Working Papers 20-1159, Toulouse School of Economics (TSE).

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