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The internal limits to firms' nonmarket activities

  • Bonardi, Jean-Philippe

It is well documented that firms develop nonmarket strategies in an effort to shape public policy changes to their advantage. But are there no limits to this? This paper argues that there is, in fact, an important limitation, internal to the firm, that stems from the necessity for firms to integrate market and nonmarket activities. Because the two types of activities are not always complements but sometimes substitutes, firms end up forgoing part of their nonmarket activities to avoid restricting the development of their market strategies. This argument is tested in the context of the European telecommunications industry. Results suggest that there is reasonable ground for optimism regarding the potentially negative influence that firms’ nonmarket activities might play in a democracy.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14500.

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Date of creation: 2008
Date of revision:
Handle: RePEc:pra:mprapa:14500
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  1. Bonardi, Jean-Philippe & Holburn, Guy & Vanden Bergh, Rick, 2006. "Nonmarket performance: Evidence from U.S. electric utilities," MPRA Paper 14437, University Library of Munich, Germany.
  2. Baumol, William J & Ordover, Janusz A, 1985. "Use of Antitrust to Subvert Competition," Journal of Law and Economics, University of Chicago Press, vol. 28(2), pages 247-65, May.
  3. Amacher, Ryan, et al, 1985. "The Behavior of Regulatory Activity over the Business Cycle: An Empirical Test," Economic Inquiry, Western Economic Association International, vol. 23(1), pages 7-19, January.
  4. Clifford Winston, 1998. "U.S. Industry Adjustment to Economic Deregulation," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 89-110, Summer.
  5. 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.
  6. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
  7. MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
  8. Pablo T. Spiller & Carlo G. Cardilli, 1997. "The Frontier of Telecommunications Deregulation: Small Countries Leading the Pack," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 127-138, Fall.
  9. Gordon Tullock, 1975. "The Transitional Gains Trap," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 671-678, Autumn.
  10. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
  11. McCormick, Robert E & Shughart, William F, II & Tollison, Robert D, 1984. "The Disinterest in Deregulation," American Economic Review, American Economic Association, vol. 74(5), pages 1075-79, December.
  12. Teske, Paul E, 1991. " Rent-Seeking in the Deregulatory Environment: State Telecommunications," Public Choice, Springer, vol. 68(1-3), pages 235-43, January.
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