The Allocation of Resources by Interest Groups: Lobbying, Litigation and Administrative Regulation

One of the central concerns about American policy making institutions is the degree to which political outcomes can be influenced by interested parties. While the literature on interest group strategies in particular institutions - legislative, administrative, and legal - is extensive, there is very little scholarship which examines how the interdependencies between institutions affects the strategies of groups. In this paper we examine in a formal theoretical model how the opportunity to litigate administrative rulemaking in the courts affects the lobbying strategies of competing interest groups at the rulemaking stage. Using a resource-based view of group activity, we develop a number of important insights about each stage that cannot be observed by examining each one in isolation. We demonstrate that lobbying effort responds to the ideology of the court, and the responsiveness of the court to resources. In particular, (1) as courts become more biased toward the status quo, interest group lobbying investments become smaller, and may be eliminated all together, (2) as interest groups become wealthier, they spend more on lobbying, and (3) as the responsiveness of courts to resources decreases, the effect it has on lobbying investments depends on the underlying ideology of the court

Does Private Money Buy Public Policy? Campaign Contributions and Regulatory Outcomes in Telecommunications

To what extent can market participants affect the outcomes of regulatory policy? In this paper, we study the effects of one potential source of influence – campaign contributions – from competing interests in the local telecommunications industry, on regulatory policy decisions of state public utility commissions. Using a unique new data set, we find, in contrast to much of the literature on campaign contributions, that there is a significant effect of private money on regulatory outcomes. Indeed, this result is robust to numerous alternative specifications and persists with instrumentation. We also assess the extent of omitted variable bias that would have to exist to obviate the estimated result. We find that for our result to be spurious, omitted variables would have to explain more than five times the variation in the mix of private money as is explained by the variables included in our analysis. We consider this to be very unlikely