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Looking for leverage in PAC markets: Corporate and labor contributions considered

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  • Gerald Keim
  • Asghar Zardkoohi

Abstract

In this paper we explore the popular perception that political action committees (PACs) have substantial influence over elected legislators. We question whether the leverage in the PAC market is on the side of the contribution-maker or the contribution-taker. Analysis of the structure of PAC markets suggests most markets are sellers' markets, not buyers' markets. PAC contributions then may be more like protection money than attempts to buy votes or access. The leverage of the politician (seller) may be tempered if a substantial number of large PACs have homogeneous interests, and the ability to concentrate their contributions to the same legislators. This contention is supported by analysis of differences in labor and corporate PAC giving in the 1980 and 1984 general elections. Labor PACs, which are much larger than corporate PACs, have more homogeneous interests, give virtually all of their money to one party, and appear to have more discretion in making contribution decisions than do corporate PACs. An implication of this analysis for corporate executives is that using political action committees at the federal level may not be a strategy where corporations have a comparative advantage. — Senator Robert Dole (R-Kan.) — Senator Thomas Eaglecton (D-Mo.) Copyright Kluwer Academic Publishers 1988

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  • Gerald Keim & Asghar Zardkoohi, 1988. "Looking for leverage in PAC markets: Corporate and labor contributions considered," Public Choice, Springer, vol. 58(1), pages 21-34, July.
    • Handle: RePEc:kap:pubcho:v:58:y:1988:i:1:p:21-34
    DOI: 10.1007/BF00183326
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    References listed on IDEAS

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    1. Gary Jacobson, 1985. "Money and votes reconsidered: congressional elections, 1972–1982," Public Choice, Springer, vol. 47(1), pages 7-62, January.
    2. W. Welch, 1981. "Money and votes: A simultaneous equation model," Public Choice, Springer, vol. 36(2), pages 209-234, January.
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    Cited by:

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    2. Dana L. Hoag & Thomas G. Field, 1999. "Political and Economic Factors Affecting Agricultural PAC Contribution Strategies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 397-407.
    3. Adam Fremeth & Brian Kelleher Richter & Brandon Schaufele, 2013. "Campaign Contributions over CEOs' Careers," American Economic Journal: Applied Economics, American Economic Association, vol. 5(3), pages 170-188, July.
    4. Kenneth V. Greene & Phillip J. Nelson, 1998. "Political Party Purpose, Individual Votes, and Political Action Committee Contributions," Public Finance Review, , vol. 26(1), pages 3-23, January.
    5. Stuart D. Allen & Amelia S. Hopkins, 1997. "The Textile, Apparel, and Footwear Act of 1990: Determinants of Congressional Voting," Public Finance Review, , vol. 25(5), pages 542-552, September.
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    7. Timothy Werner, 2017. "Investor Reaction to Covert Corporate Political Activity," Strategic Management Journal, Wiley Blackwell, vol. 38(12), pages 2424-2443, December.
    8. Robert Florence, 1999. "An analysis of PAC contributions and legislator quality," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(1), pages 59-73, March.
    9. Roger Congleton, 1989. "Campaign finances and political platforms: The economics of political controversy," Public Choice, Springer, vol. 62(2), pages 101-118, August.

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