When Businesses Collide: Producer Interest Groups and the Politics of Regulation
Campbell, Heather E., Policy Studies Journal
Both in the study of politics and the popular conception of politics, interest group behavior is considered one of the dominant determinants of outcomes of political processes, including regulation. Though it has been recognized that the simple capture theory of regulation is too simple, especially for public utility regulation (e.g., Anderson, 1981; Berry, 1984; Cohen, 1992; Meier, 1985; Peltzman, 1976), there are both formal (e.g., Olson, 1971) and informal reasons to believe that business interest groups may be disproportionately influential during political processes. Yet, business interests are not all the same, and business interests may be in conflict (Gilligan, Marshall, & Weingast, 1989; Noll & Owen, 1983).
An important question for our understanding of interest-group politics generally is what happens when business groups collide - for example, when other business groups provide countervailing influence to the influence of the regulated firm. The usefulness of this question for understanding the politics of regulation is highlighted by the Telecommunications Act of 1996, which specifically seeks to pit some business interests against others. Under this new regime, if we seek to predict, we must answer: "When there is more than one firm, which firm's interest will be promoted?" (Campbell & Barrett, 1997, p. 521).
This study uses an existing model of public utility rate cases (Campbell, 1996), adds measures of business intervention, reestimates it to provide evidence regarding the relative influence of business interest groups, and then discusses implications for the Telecommunications Act. Because the model and most of the dataset originally were used to test other hypotheses, the results of this study are exploratory. Nonetheless, the results offer us one of the best available methods for predicting the effects of the important interactions between regulated firms, business interveners, and state public utility regulators. Further, they cast light on often-neglected elements of interest-group politics.
Considering Business Intervention
Many concepts of political influence predict that producer groups (firms and their representatives) will have important political power that will be greater than that of citizen groups. Kingdon (1984, p. 50) finds that "business groups are indeed the most often important of the interest groups," and interest groups are discussed only somewhat less than the administration and Congress (Kingdon, 1984, p. 49). Businesses are active lobbyists. Interest groups that are active continually in more than 45 states include: individual business corporations; business and trade organizations; utility companies and associations; banks and financial institutions and associations; insurance companies and associations; oil and gas companies and associations; and contractors, builders, and developers (Thomas & Hrebenar, 1996, p. 127). Furthermore, in a ranking of the 40 most influential interests across the states, "general business organizations (chambers of commerce and the like)" and "utility companies and associations (electric, gas, water, telephone, cable TV)" are second and third, respectively (Thomas & Hrebenar 1996, p. 149).(1) Yet, when analysts seek to understand the effect of interest group pressures upon public utility rate cases, citizen-funded and government-funded group intervention is emphasized while business intervention largely is ignored.
Gilligan, Marshall, and Weingast (1989, p. 60), in a study of the creation of the Interstate Commerce Act and the Interstate Commerce Commission (ICC), argue that a "multiple-interest-group perspective" is generally important for understanding regulatory politics, which, "in many cases, appears not to follow the stylized pattern of a concentrated producer group against an undifferentiated, diffuse set of consumers." A major point of their argument is that institutional structures are …
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Publication information: Article title: When Businesses Collide: Producer Interest Groups and the Politics of Regulation. Contributors: Campbell, Heather E. - Author. Journal title: Policy Studies Journal. Volume: 26. Issue: 2 Publication date: Summer 1998. Page number: 310+. © 1999 Policy Studies Organization. COPYRIGHT 1998 Gale Group.
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