The Influence of the New Type of Interest Group in the Regulatory Process

• In Event: From Crypto to AI: Mobilization On and Against New Platforms and Technologies (Virtual Session)

Abstract

Today, with the market disruption caused by the online platform business, such as Uber, Airbnb, and Cryptocurrency exchange, a new form of conflict between the government and the interest groups has emerged. Unlike in the traditional market system, where established interest groups could influence the government’s path-dependent regulatory decision-making, the emerging market entrants encouraged the public to become their supporters by voluntarily forming online-based interest groups. For instance, in the Korean cryptocurrency exchange case, the Korean government initially announced to ban on the service but was forced to back down with the advent of the new type of interest group, which this study named the Invisible Interest Group(IIG). This study argues that the IIG caused such changes in the relationship between the government and interest groups, with its unique characteristics of being organized ad-hoc without central organization, involving the mass public to participate mainly in the online-based activities to support the specific business, seeking for their private interests. In particular, this study will examine how the ad-hoc, yet intensive resistance caused by the emergence of the IIG could stop the government from exerting its initial policy intention, through the case analysis on the Korean cryptocurrency exchange incidence.

The objective of this study is to examine the IIG compared to the existing interest groups, especially Olson’s collective action discussion, in terms of its extern characteristics and its mobilization factors. This study indicates a new type of interest group as the IIG (Invisible Interest Group), for its distinguishing characteristics that differentiate it from the established interest group – in terms of (1) the scope and goals of the participants, (2) information sharing and mobilization channel, and (3) characteristics of their mobilization. Moreover, the paper would further discuss how such an unprecedented type of interest group could mobilize a large number of participants, who could be seen as the mere public, to participate as part of the interest group for a specific business.

The IIG is the newly-advent interest group that mobilizes individuals through online channels, without a pivotal organization to perform collective action, and its size and influence cannot be estimated before the actual exercise of its influence. The emergence of the IIG is unique since the new group of participants – the latent group within the market – seek specific business’ interests to achieve either their existing or expected private interests. Rather than forming an organization, they share the information and plan mobilization activities mainly through the internet. Accordingly, they are not the permanent participants for the collective action, but voluntarily gather only temporarily for their goals, and disappear as soon as they reach their mobilization objectives. Regardless of their somewhat unstable and undecided forms of organization or mobilization manners, however, they make their activities meaningful by successfully resisting the established market leaders with long-termly maintained stable interest groups, which possess considerable political and economic influences. This type of the new interest group holds contradicting characteristics against traditional interest group that is ‘selective private interest-seeking interest group based on the fixed central organization,’ by being ‘ad-hoc public-mobilized interest group without central organization seeking for private interests by voluntarily working as a specific business’ interest group.’

More importantly, the IIG does not only hold external characteristics that differentiate itself from the established interest groups but also has unique internal characteristics, which are the mobilization factors for its latent market group participants. That is, to present the prosumers to experience the financial benefits before the regulation takes part. Accordingly, the prosumers, who were traditionally considered as either latent group or the public, have clear needs to take part in the IIG’s activities. The prosumers can acknowledge their expected potential financial loss if the legalization process for the new business fails. Since people value gains and losses differently, placing more weight on perceived gains versus perceived losses(Kahneman, 1979) or not willing to lose the existing welfare benefits(Pierson, 1994), participants of the IIG would likely to be mobilized to seek for their interests.

Author

• Chee Hae Chung, Seoul National University