This dissertation studies how the institution of federalism structures policy reform in the American political economy. It amends and expands the classic logic of states as “laboratories of democracy,” which suggests that successful state policy experiments diffuse across the federal system due primarily to mechanisms of learning and healthy competition. I argue that this perspective misses a crucial element of what state policy reforms do—which is to shape the political power of coalitions of organized interests active in the broader federal system.

In three policy areas, I demonstrate how policy feedbacks on interest group politics operating across the federal system have structured policy reform pathways. First, in the case of rooftop solar policy, I show how solar power installers built their industry by first locating in states with favorable policy terrain, and then leveraged resources they accumulated to influence policy in other states, allowing them to expand into new markets. Turning to marijuana policy, the marijuana industry initially followed a similar pattern, but because of the context of a federal prohibition, industry political efforts soon focused much more heavily on influencing national policy than on spreading legalization state-by-state. I leverage exogenous variation in likelihood of legalization from ballot initiative rules to show that state legalization had a causal effect on support for marijuana policy reforms in Congress. Finally, in the case of charter school policy, I argue that as state-level experiments drove charter growth, charter advocates were able to recruit certain foundations, which saw charter schools as a vehicle for achieving their own education policy goals, as allies. Crucially, foundations used their extensive resources to promote pro-charter policies more broadly than charter school networks and other advocates would have been able to on their own.

By highlighting the national-level political implications of state-level policy decisions, the dissertation supports the notion that state politics and policy is more consequential than traditional perspectives on federalism suggest, and in doing so, helps to explain why national groups have made such massive investments in state politics in recent years. Indeed, findings suggest that state policy reforms can be a crucial ingredient in building coalitions for (geographically) broader policy change.