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PAC Contributions and Defense Contracting

Published online by Cambridge University Press:  20 January 2017

Micky Tripathi
Micky Tripathi*
Affiliation:
Massachusetts Institute of Technology
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Abstract

This paper examines the political activity of US defense contractors over the years 1980–1994. Using econometric techniques to account for both fixed-effects and selection, I examine the industry determinants and distribution patterns of political action committee (PAC) contributions to the US House of Representatives. The analysis finds that the size of the defense budget is a primary factor explaining political activity across the industry as well as within individual firms; firm size, dependency on defense, and defense contract awards explain much less. I also find that firms appeared to change their political strategies in the face of large exogenous shifts in the US defense budget. While defense expenditures were on the rise, defense firms spread their contributions relatively broadly over the defense committee system; when the budget fell, however, the firms switched strategies and targeted committee leaders. An incidental contribution of the paper is an empirical application of the trimmed least absolute deviations estimator for fixed-effects models with selection.

Type
Research Article
Information
Business and Politics , Volume 2 , Issue 1 , April 2000 , pp. 53 - 73
Copyright
Copyright © V.K. Aggarwal 2000 and published under exclusive license to Cambridge University Press 

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