Integrated Market and Nonmarket Strategies in Client and Interest Group Politics

Integrated Market and Nonmarket Strategies in Client and Interest Group Politics

1998Working Paper No. 1480

This paper provides a model of integrated market and nonmarket strategies in the context of an industry facing regulatory legislation that differentially affects the firms in the industry. The legislation 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 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, and the integrated strategies of the firms must constitute an equilibrium for their market competition and an equlibrium in their nonmarket competition, including that with the environmental interest group. Collective action in the form of coalition building an rent chain mobilization is considered.