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Interest Groups, Veto Points, and Electricity Infrastructure Deployment

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  • Henisz, Witold J.
  • Zelner, Bennet A.

Abstract

In this article we examine the effects of interest group pressure and the structure of political institutions on infrastructure deployment by state-owned electric utilities in a panel of seventy-eight countries during the period 1970 94. We consider two factors that jointly influence the rate of infrastructure deployment: (1) the extent to which the consumer base consists of industrial consumers, which are capable of exerting discipline on political actors whose competing incentives are to construct economically inefficient white elephants to satisfy the demands of concentrated geographic interests, labor unions, and national engineering and construction lobbies; and (2) veto points in formal policymaking structures that constrain political actors, thereby reducing these actors sensitivity to interest group demands. A higher fraction of industrial customers provides political actors with stronger incentives for discipline, reducing the deployment of white elephants and thus the infrastructure growth rate, ceteris paribus. Veto points reduce political actors sensitivity to interest group demands in general and thus moderate the relationship between industrial interest group pressure and the rate of infrastructure deployment.Both authors contributed equally and list their names alphabetically on this joint work. Both authors acknowledge funding for this research from the University of California Energy Institute. Zelner acknowledges additional funding from the Lynde and Harry Bradley Foundation and the Edgar F. Kaiser Chair at the Haas School of Business, University of California, Berkeley. Henisz acknowledges additional funding from the Reginald H. Jones Center for Management Policy, Strategy, and Organization at the Wharton School, University of Pennsylvania. Thanks to Severin Borenstein, Rachel Croson, Jos de la Torre, Alexander Dyck, Tom Gilligan, Florencio Lopez-de-Silanes, Edward Mansfield, Mathew McCubbins, Will Mitchell, David Mowery, Jeffrey Nugent, Dennis Quinn, George Tsebelis, Joel Waldfogel, Oliver Williamson, and Jan Zabojnik for their comments on previous drafts. Any errors are the responsibility of the authors.

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Bibliographic Info

Article provided by Cambridge University Press in its journal International Organization.

Volume (Year): 60 (2006)
Issue (Month): 01 (January)
Pages: 263-286

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Handle: RePEc:cup:intorg:v:60:y:2006:i:01:p:263-286_06

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Cited by:
  1. Vachani, Sushil & Doh, Jonathan P. & Teegen, Hildy, 2009. "NGOs' influence on MNEs' social development strategies in varying institutional contexts: A transaction cost perspective," International Business Review, Elsevier, vol. 18(5), pages 446-456, October.
  2. Stephane Straub, 2008. "Infrastructure and Development: A Critical Appraisal of the Macro-level Literature," ESE Discussion Papers 178, Edinburgh School of Economics, University of Edinburgh.
  3. Clifton, Judith & Díaz-Fuentes, Daniel & Revuelta, Julio, 2009. "Explaining Telecoms and Electricity Internationalization in the European Union: A Political Economy Perspective," MPRA Paper 33037, University Library of Munich, Germany.
  4. Konstantin Sonin & Scott Gehlbach, 2004. "Businessman Candidates," Econometric Society 2004 North American Summer Meetings 178, Econometric Society.
  5. Era Dabla-Norris & Jim Brumby & Annette Kyobe & Zac Mills & Chris Papageorgiou, 2012. "Investing in public investment: an index of public investment efficiency," Journal of Economic Growth, Springer, vol. 17(3), pages 235-266, September.
  6. Aghassi Mkrtchyan, 2004. "Impact Of Regulated Price Adjustments On Price Variability In A Very Low Inflation Transition Economy: Case Of Armenia," William Davidson Institute Working Papers Series wp731, William Davidson Institute at the University of Michigan.
  7. Stephane Straub, 2008. "Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges," ESE Discussion Papers 179, Edinburgh School of Economics, University of Edinburgh.
  8. Alexander Libman, 2012. "Democracy and Growth: Is The Effect Non-Linear?," Economic Research Guardian, Weissberg Publishing, vol. 2(1), pages 99-120, May.
  9. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
  10. Duso, Tomaso & Seldeslachts, Jo, 2010. "The political economy of mobile telecommunications liberalization: Evidence from the OECD countries," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 199-216, June.
  11. Carlo Cambini & Laura Rondi, 2010. "Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt," Working Papers 2010.69, Fondazione Eni Enrico Mattei.
  12. Antonio Estache & Liam Wren-Lewis, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," Working Papers ECARES ECARES 2010-033, ULB -- Universite Libre de Bruxelles.

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