We develop a model of experimentation and learning in policymaking when control of power is temporary. We demonstrate how an early office holder who would otherwise not experiment is nonetheless induced to experiment when his hold on power is temporary. This preemptive policy experiment is profitable for the early office holder as it reveals information about the policy mapping to his successor, information that shapes future policy choices. Thus policy choices today can cast a long shadow over future choices purely through information transmission and absent any formal institutional constraints or real state variables. The model we develop utilizes a recent innovation that represents the policy mapping as the realized path of a Brownian motion. We provide a precise characterization of when preemptive experimentation emerges in equilibrium and the form it takes. We apply the model to several well known episodes of policymaking, reinterpreting the policy choices as preemptive experiments.

The operation of markets and of politics are in practice deeply intertwined. Political decisions set the rules of the game for market competition and, conversely, market competitors participate in and influence political decisions. We develop an integrated model to capture the circularity between the two domains. We show that a positive feedback loop emerges such that market power begets political power, and political power begets market power, but that this feedback loop is bounded. With too much market power, the balance between politics and markets itself becomes lopsided and this drives a wedge between the interests of a policymaker and the dominant firm. Although such a wedge would seem pro‐competitive, we show how it can exacerbate the static and dynamic inefficiency of market outcomes. More generally, our model demonstrates that intuitions about market competition can be upended when competition is intermediated by a strategic policymaker.