Abstract: Despite the well-documented nationalization of local politics over the late 20th century, one type of local organization has flourished: the chamber of commerce. Local chambers, influential interest groups in which firms operating in a given municipality band together to lobby for improved local business conditions, are now present in over 6,700 municipalities across nearly 2,300 counties. Why has the private sector been so successful at organizing locally, despite the costs inherent in collective action? I argue that industrial diversification at the local level makes chamber formation more likely; when firms are co-located with complementary industries rather than direct competitors, lobbying for geographically-specific (“place-based”) benefits offers greater relative gains. I provide evidence in support of this explanation using new data on thousands of local chambers incorporated between 1970 and 2018, an identification strategy based on a novel Bartik-style shift-share instrument, and member-level data for twenty individual chambers. The results demonstrate how broader patterns of structural economic change have affected interest representation at the local level.
Moderator: Gabi Spilker