Regulating American industries: Markets, politics, and the institutional determinants of fire insurance regulation

This article assesses three approaches to state regulation: capture theory, interest group analyses, and neoinstitutional research. State-level event history analyses of fire insurance rate regulation from 1906 to 1930 are us ed. Contrary to capture theory, regulation was not driven simply by firms' interests in market control. Instead, consistent with interest group analys es, regulation was more likely when anticompany forces-farmers and small bu sinesses-could challenge big business politically. Further, as neoinstituti onal research suggests, regulation was more likely when industry governance evoked legitimacy crises, when courts and professions endorsed regulation and its underlying models, and when states developed system-wide administra tive capacities. Institutional conditions also mediated the effects of mark ets and politics on regulation. Using these findings, we develop a theory o f how political and institutional conditions shape industries' governance o ptions.