Using Geographic Information Systems to Study Interstate Competition

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Abstract
Scholars have proposed two distinct explanations for why policies diffuse across American states: (1) policymakers learn by observing the experiences of nearby states, and (2) states seek a competitive economic advantage over other states. The most common empirical approach for studying interstate influence is modeling an indicator of a state's policy choice as a function of its neighbors' policies, with each neighbor weighted equally. This can appropriately specify one form of learning model, but it does not adequately test for interstate competition: when a policy diffuses due to competition, states' responses to other states vary depending on the size and location of specific populations. We illustrate with two substantive applications how geographic information systems (GIS) can be used to test for interstate competition. We find that lottery adoptions diffuse due to competition—rather than to learning—but find no evidence of competition in state choices about welfare benefits. Our empirical approach can also be applied to competition among nations and local jurisdictions.

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