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Businessman Candidates

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Author Info
Scott Gehlbach () (UW Madison)
Konstantin Sonin () (New Economic School, CEFIR, and CEPR)
Ekaterina Zhuravskaya () (New Economic School/CEFIR and CEPR)

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Abstract

In immature democracies, businessmen run for public office to gain direct control over policy, whereas in mature democracies they typically rely on other means of influence. We develop a simple model to show that businessmen run for office only when two conditions hold. First, as in many immature democracies, institutions which make reneging on campaign promises costly must be poorly developed. In such environments, office holders have monopoly power which can be used to extract rents, and businessmen may run to capture those rents. Second, however, the returns to businessmen from policy influence must not be too large, as otherwise the endogenous rents from holding office draw professional politicians into the race, crowding out businessmen candidates. Analysis of data on Russian gubernatorial elections supports these predictions, showing that 1) businessman candidates are less likely in regions with high media freedom and government transparency, institutions which raise the cost of reneging on campaign promises, and 2) businessman candidates are less likely in regions where returns to policy influence (measured by regional resource abundance) are large, but only where media are unfree and government nontransparent.

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Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0067.

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Length: 37 pages
Date of creation: Jul 2006
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Handle: RePEc:cfr:cefirw:w0067

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Evgeny Yakovlev & Ekaterina Zhuravskaya, 2007. "Deregulation of Business," Working Papers w0097, Center for Economic and Financial Research (CEFIR). [Downloadable!]
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  2. Gagliarducci, Stefano & Nannicini, Tommaso & Naticchioni, Paolo, 2008. "Outside Income and Moral Hazard: The Elusive Quest for Good Politicians," IZA Discussion Papers 3295, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Timothy Besley & Rohini Pande & Vijayendra Rao, 2005. "Political Selection and the Quality ofGovernment: Evidence from South India," STICERD - Development Economics Papers 44, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
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