The Marketing System of Exchange Between Regulatory and Political Entrepreneurs Engaging in Arbitrage

After receiving cease and desist letters in 2018, Bird strategically developed hospitable relationships with politicians that allowed the scooter-sharing firm to continue operating. Bird acts as a regulatory entrepreneur in seeking unfair legal treatment and the politicians brokering the legal deal as political entrepreneurs. The business models for unfairly changing or applying law represents entrepreneurial arbitrage. A mixed methods approach examines the structure of relationships between regulatory and political entrepreneurs through the Bootleggers and Baptists conceptual lens. Like Bird solving traffic and pollution problems for city leaders, Baptists served as a moral cover for illegal liquor vendors. Guided by a general systems theory, it is found that the micro-level, relational exchanges both assign value to as well as uses intellectual commodities to establish expectations guiding ongoing exchanges. Therefore, a marketing system is uncovered. This research also finds relationships structured by favors in sharp contrast to political markets governed by threats.

Citizen Participation in Political Markets: Extending Service-Dominant Logic to Public Policy

While service-dominant logic prescribes consumer participation with firms, some theorists of elitist democracy oppose citizen participation in governance because these theorists perceive citizens as being incompetent in political matters. This study, grounded in political marketing theory, suggests that citizens do, indeed, have the competence for participating in governance through the thin-participation methods (i.e., those not requiring citizen interaction in groups) presented herein. These methods feature relatively short amounts of time needed for individual respondents to learn about issues in an online environment and to take a survey including trade-off tasks as part of a discrete-choice experimental design. Set in the context of a budget crisis for a state (Wyoming), this study assessed citizens’ thoughts about the state’s political processes as well as about policy preferences for seven important policy areas of state budgeting. The results of this study provide evidence that citizens have the crucial operant resources (knowledge and skills) to participate in all types of political markets (electoral, governmental, and intragovernmental). The study offers researchers knowledge for further developing service-dominant logic in government ecosystems of service.

Political Economy of Reform

“Reform” in the economics literature refers to changes in government policies or institutional rules because status-quo policies and institutions are not working well to achieve the goals of economic wellbeing and development. Further, reform refers to alternative policies and institutions that are available which would most likely perform better than the status quo. The main question examined in the “political economy of reform” literature has been why reforms are not undertaken when they are needed for the good of society. The succinct answer from the first generation of research is that conflict of interest between organized socio-political groups is responsible for some groups being able to stall reforms to extract greater private rents from status-quo policies. The next generation of research is tackling more fundamental and enduring questions: Why does conflict of interest persist? How are some interest groups able to exert influence against reforms if there are indeed large gains to be had for society? What institutions are needed to overcome the problem of credible commitment so that interest groups can be compensated or persuaded to support reforms? Game theory—or the analysis of strategic interactions among individuals and groups—is being used more extensively, going beyond the first generation of research which focused on the interaction between “winners” and “losers” from reforms. Widespread expectations, or norms, in society at large, not just within organized interest groups, about how others are behaving in the political sphere of making demands upon government; and, beliefs about the role of public policies, or preferences for public goods, shape these strategic interactions and hence reform outcomes. Examining where these norms and preferences for public goods come from, and how they evolve, are key to understanding why conflict of interest persists and how reformers can commit to finding common ground for socially beneficial reforms. Political markets and institutions, through which the leaders who wield power over public policy are selected and sanctioned, shape norms and preferences for public goods. Leaders who want to pursue reforms need to use the evidence in favor of reforms to build broad-based support in political markets. Contrary to the first generation view of reforms by stealth, the next generation of research suggests that public communication in political markets is needed to develop a shared understanding of policies for the public good. Concomitantly, the areas of reform have circled from market liberalization, which dominated the 20th century, back to strengthening governments to address problems of market failure and public goods in the 21st century. Reforms involve anti-corruption and public sector management in developing countries; improving health, education, and social protection to address persistent inequality in developed countries; and regulation to preserve competition and to price externalities (such as pollution and environmental depletion) in markets around the world. Understanding the functioning of politics is more important than ever before in determining whether governments are able to pursue reforms for public goods or fall prey to corruption and populism.