Chasing the smokestack: Strategic policymaking with multiple instruments

Arbeitspapier

Recent studies suggest a considerable amount of horizontal strategic interaction amongst governments exists. The empirical approach in these studies typically relies on estimating reaction functions in a uni-dimensional policy framework, where a nonzero slope estimate suggests strategic interactions exist. While this framework may be useful within certain contexts, it is potentially too restrictive; for example, in models of resource competition, locales may use multiple instruments to attract agents, leading to strategic interaction across policy instruments. In this study, we develop a theoretic construct that includes yardstick competition in a world of multi-dimensional policies to show that while a zero-sloped reaction function may exist for any particular policy, this does not necessarily imply the absence of strategic interactions. We empirically examine the implications of the model using US state-level panel data over the period 1977-1994. Empirical results suggest important cross-policy strategic interactions exist, lending support in favor of the multi-dimensional framework

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 45.2002

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Renewable Resources and Conservation: Government Policy
• Subject: Political economy ; resource competition ; strategic policymaking ; yardstick competition ; Institutioneller Wettbewerb ; Neue politische Ökonomie ; Umweltpolitik ; Infrastrukturpolitik ; Steuerpolitik ; Theorie ; USA ; Landespolitik

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fredriksson, Per G. ; List, John A. ; Millimet, Daniel L.
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/119651
• Last update: 10.03.2025, 11:45 AM CET