Policy and process: A game-theoretic framework for the design of non-market strategy

Abstract

We draw on the Positive Political Theory literature to develop insights into how firms decide whether to lobby legislatures or agencies in order to gain favorable policy outcomes. We present a simple structural model of the interaction among a firm, a legislature, an executive, a court and an agency to illustrate how, even if the agency has responsibility for implementing public policy, the firm will, under the right conditions, lobby the legislature instead to bring about a change in policy. Accordingly, we contribute to the existing non-market strategy literature by incorporating institutional players other than the legislature into the analysis, and by addressing the question of how firms allocate lobbying resources across the different branches of government.

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