Disentangling Diffusion: The Effects of Social Learning and Economic Competition on State Policy Innovation and Expansion

When modeling regional policy diffusion effects, scholars have traditionally made appeals to both social learning and economic competition as causes of diffusion. In their empirical studies of policy adoption, however, they do not attempt to determine which of these two processes are at work. In this article, we argue that these two types of diffusion may have different implications for when a state first adopts a policy and subsequent changes in the extent of that policy and that these effects vary by policy area. In the specific policy area that we study, Indian gaming, we expect social learning diffusion to influence adoption but not expansion; economic competition should influence both policy adoption and policy expansion. Our empirical results confirm these predictions. To study both policy adoption and innovation, we apply models for event counts to state policy data, which allows us to model the extent of policy adoption over time, rather than just the timing of first adoption as is common with event history models.