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Regulatory Entrepreneurship

66 Pages Posted: 7 Mar 2016 Last revised: 6 Sep 2017

Elizabeth Pollman

Loyola Law School Los Angeles

Jordan M. Barry

University of San Diego School of Law

Date Written: March 3, 2016

Abstract

This Article examines what we term “regulatory entrepreneurship” — pursuing a line of business in which changing the law is a significant part of the business plan. Regulatory entrepreneurship is not new, but it has become increasingly salient in recent years as companies from Airbnb to Tesla, and from DraftKings to Uber, have become agents of legal change. We document the tactics that companies have employed, including operating in legal gray areas, growing “too big to ban,” and mobilizing users for political support. Further, we theorize the business and law-related factors that foster regulatory entrepreneurship. Well-funded, scalable, and highly connected startup businesses with mass appeal have advantages, especially when they target state and local laws and litigate them in the political sphere instead of in court.

Finally, we predict that regulatory entrepreneurship will increase, driven by significant state and local policy issues, strong institutional support for startup companies, and continued technological progress that facilitates political mobilization. We explore how this could catalyze new coalitions, lower the cost of political participation, and improve policymaking. However, it could also lead to negative consequences when companies’ interests diverge from the public interest.

Keywords: entrepreneurship, startups, corporate political activity, lobbying, corporations, political economy, regulation, law and economics, sharing economy, platform, airbnb, uber, tesla, draftkings, fanduel, regulatory entrepreneurship

Suggested Citation

Pollman, Elizabeth and Barry, Jordan M., Regulatory Entrepreneurship (March 3, 2016). 90 S. Cal. L. Rev. 383 (2017); Loyola Law School, Los Angeles Legal Studies Research Paper No. 2017-29. Available at SSRN: https://ssrn.com/abstract=2741987 or http://dx.doi.org/10.2139/ssrn.2741987

Elizabeth Pollman (Contact Author)

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States

Jordan Barry

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

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