External Limits and Internal Determinants of State Public Policy

choose among local jurisdictions in a Tiebout-like process. As a truly seminal work, Peterson's book has generated extensive commentary, rebuttal, and reexamination by leading scholars of local politics (e.g., Stone and Sanders 1987). Almost entirely overlooked is the book's potential significance for the study of state politics.' Surely the logic of Peterson's thesis extends to any set of subnational units in competition with one another. Indeed, much of Peterson's empirical analysis relies upon state or state-local data rather than city data. Thus, it would seem that Peterson himself recognized the theory's applicability to states. Utilization of Peterson's developmental-allocational-redistributive schema at the state level might provide a way to reinterpret existing analyses of state policy outputs. Peterson's typology, after all, focuses upon some of the standard policy categories so often analyzed in the policy determinants literature (e.g., education, welfare, and highways). Thus, an empirical analysis embedded in Peterson's framework might shed new light on old debates, for example the relative power of economic and political factors in determining state policy. In the following sections we undertake such an analysis, explicitly structured so as to provide comparison with the Dye (1966), Sharkansky (1968), and Jennings (1979) tradition. At the same time, there have been significant methodological advances in the decade since the policy determinants literature flourished. In our analysis we will utilize different kinds of significance