By the people and for the people: Ridesharing companies' political strategies in the U.S.

Abstract

We argue that in the face of local opposition to disruptive technologies, technology firms resort to state governments to legalize and regulate the industry. They use both direct political strategies, mainly lobbying and campaign contributions, and indirect political strategies, such as user mobilization. However, the two strategies have different impacts when the interests of users and firms are in conflict. We find evidence in the US ridesharing industry from 2009 to 2019. Adopting both the DID method with entropy balancing and the instrument variable control function method, we find that the use of user mobilization strategy simultaneously increases the possibility that a state will legalize the technology and enhances the stringency of regulations that protect passengers and thus pose a burden on ridesharing companies.