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Businessman Candidates

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  • Scott Gehlbach

    () (UW Madison)

  • Konstantin Sonin

    () (New Economic School, CEFIR, and CEPR)

  • Ekaterina Zhuravskaya

    () (New Economic School/CEFIR and CEPR)

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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Bibliographic Info

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
Date of revision:
Handle: RePEc:cfr:cefirw:w0067

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References

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Citations

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Cited by:
  1. Beate R. Jochimsen & Sebastian Thomasius, 2012. "The Perfect Finance Minister: Whom to Appoint as Finance Minister to Balance the Budget?," Discussion Papers of DIW Berlin 1188, DIW Berlin, German Institute for Economic Research.
  2. Pande, Rohini, 2007. "Understanding Political Corruption in Low Income Countries," Working Paper Series rwp07-020, Harvard University, John F. Kennedy School of Government.
  3. Stefano Gagliarducci & Tommaso Nannicini & Paolo Naticchioni, 2007. "Outside income and moral hazard : the elusive quest for good politicians," Economics Working Papers we073218, Universidad Carlos III, Departamento de Economía.
  4. Rohini Pande & Timothy Besley & Vijayendra Rao, 2005. "Political Selection and the Quality of Evidence: Evidence form South India," Working Papers id:261, eSocialSciences.
  5. Yakovlev, Evgeny & Zhuravskaya, Ekaterina, 2007. "Deregulation of Business," CEPR Discussion Papers 6610, C.E.P.R. Discussion Papers.
  6. Thomas Braendle & Alois Stutzer, 2011. "Selection of Public Servants into Politics," Working papers 2011/06, Faculty of Business and Economics - University of Basel.
  7. Pande, Rohini, 2007. "Understanding Political Corruption in Low Income Countries," CEPR Discussion Papers 6273, C.E.P.R. Discussion Papers.
  8. Djankov, Simeon & La Porta, Rafael & López-de-Silanes, Florencio & Shleifer, Andrei, 2009. "Disclosure by Politicians," CEPR Discussion Papers 7168, C.E.P.R. Discussion Papers.
  9. Timothy Besley & Rohini Pande & Vijayendra Rao, 2005. "Political Selection and the Quality of Government: Evidence from South India," STICERD - Political Economy and Public Policy Paper Series 08, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  10. C. Simon Fan & Chen Lin & Daniel Treisman, 2010. "Embezzlement Versus Bribery," NBER Working Papers 16542, National Bureau of Economic Research, Inc.
  11. Timothy Besley, 2005. "Political Selection," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 43-60, Summer.
  12. Serguey Braguinsky, 2009. "Postcommunist Oligarchs in Russia: Quantitative Analysis," Journal of Law and Economics, University of Chicago Press, vol. 52(2), pages 307-349, 05.
  13. Timothy Besley & Jose G. Montalvo & Marta Reynal‐Querol, 2011. "Do Educated Leaders Matter?," Economic Journal, Royal Economic Society, vol. 121(554), pages F205-, 08.

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