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Zhao Li is an Assistant Professor of Management and Organizations at New York University Stern School of Business.
TOPIC: Economic Geography, Regulatory Uncertainty, and Integrated Strategy: Evidence from the Fracking Boom and State Campaign Finance
ABSTRACT: Technological breakthroughs can outpace existing regulations, prompting policymakers to develop new policies to address their unanticipated externalities. We argue that electoral representation in local communities most impacted by such externalities shapes whether legislative proposals subsidize or penalize industry adoption of breakthrough technologies. Consequently, firms may indirectly influence these proposals to their advantage through a geographically targeted, industry-coordinated, and electorally motivated campaign contribution strategy. We test our predictions in the context of the U.S. fracking boom following rapid advancements in commercial fracking technologies. State legislators representing districts where fracking expanded exogenously due to geological factors authored more fracking-related legislation—either facilitating or restricting industry adoption, depending on legislator partisanship. In response, fracking firms, in coordination with same-state peer firms, disproportionately directed their campaign contributions to tip elections in favor of allied Republican candidates in state legislative districts that are geologically amenable to fracking, especially if those districts were former Democratic strongholds.
Zoom Link for Seminar Series https://arizona.zoom.us/j/84592612397