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Integrated Market and Nonmarket Strategies in Client and Interest Group Politics

Published online by Cambridge University Press:  20 January 2017

David P. Baron
David P. Baron*
Affiliation:
Stanford University
*
Graduate School of Business, Stanford University, Stanford, CA 94305–5015, USA. Tel: (650) 723–3757; Fax: (650) 725–6152; E-mail: [email protected]
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Abstract

This paper provides a model of integrated market and nonmarket strategies in the context of an industry facing regulation that differentially affects the firms in the industry. The regulation is chosen in a majority rule institution, and to affect the stringency of the regulation, the firms in the industry can take nonmarket action in the form of providing support to legislators based on how they vote. The nonmarket action is considered in the context of client and interest group politics, where the latter involves competition with an environmental interest group. An integrated strategy is composed of the firm's strategy for its market environment and its strategy for its nonmarket environment. Also the integrated strategies of the firms must constitute an equilibrium in their market competition and an equilibrium for their nonmarket competition, including that with the environmental interest group. Collective action in the form of coalition building and rent chain mobilization is also considered.

Type
Research Article
Information
Business and Politics , Volume 1 , Issue 1 , April 1999 , pp. 7 - 34
Copyright
Copyright © V.K. Aggarwal 1999 and published under exclusive license to Cambridge University Press 

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Footnotes

1. This research has been supported by the National Science Foundation Grant No. SBR-9809177. I would like to thank Daniel Diermeier and two anonymous referees for their comments on an earlier draft.

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