ABSTRACT
Beginning with Buchanan and Tullock (1962), economists modeled the public policy process by assuming political actors’ behavior refl ects their self-interest. Using these assumptions, Stigler (1971) and Peltzman (1976) showed that regulators make policy choices, under certain conditions, that help regulated fi rms. Positive political theorists (e.g., McCubbins et al., 1987; Gilligan et al., 1989) criticized the Stiglerian approach for treating regulatory decisions as taking place within a vacuum. The positive political theorists developed models where regulators are constrained by other policy-makers and gained new insights into drivers of regulatory policy. Throughout all of these models, however, the regulated fi rms are passive, and do not act strategically to infl uence policy outcomes. Snyder (1990) complemented these insights by showing that fi rms’ resource allocation decisions are consistent with investment in the policy-making process. With evidence of active fi rm infl uence in the policy-making process, economists began developing models of the non-market strategies employed by fi rms (e.g., Baron, 1995). Building from this foundational stream of research, the more current literature shows that regulated fi rms develop non-market strategies in a systematic way (e.g., Bonardi et al., 2006; de Figueiredo and Edwards, 2007; Holburn and Vanden Bergh, 2008; Kingsley et al., 2012). However, the literature says little on how or why regulated fi rms employ different non-market strategies, particularly when non-market rivals elevate regulatory uncertainty.
