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The choice of lobbying strategy: direct contacts with officials or mediation via business associations

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  • Andrei Govorun

    ()
    (National Research University Higher School of Economics. Institute for Industrial and Market Studies.)

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    Abstract

    The influence of lobbying activity on economic growth and welfare is widely observed in the literature. Many scholars consider lobbying as a sort of rent-seeking and blame it for non-optimal redistribution of assets, additional costs for firms, and resource reallocation from productive activities to lobbying activities. Lobbying may result in policies and regulations that benefit a small range of firms at the cost of others. Yet some scholars argue that under some conditions lobbying may benefit society, or at least result in second-best optimality. The total outcome of lobbying should depend on how it proceeds. Although the literature on lobbying is vast and multifaceted, many studies investigate how firms choose among different lobbying strategies. This study contributes to the literature by investigating how Russian firms choose ways of lobbying. The results of the study are based on a 1000-firm survey conducted by the Higher School of Economics and the Levada Center. The study investigates channels of lobbying mentioned by the respondents and focuses on the two most common channels, which are having direct contacts with officials and collective lobbying through business associations. The findings of the study are as follows. First, the data show that these lobbying channels are more likely to be complements. Second, a comparison of the effectiveness of different channels shows that the most common ways of lobbying are also the most effective. Moreover, the effectiveness of associations and personal contacts turned out to be statistically similar. Firms that have personal connections use direct personal contacts more often. But those who have problems with access to state officials tend to use business associations. Finally, the data show that those firms that interact with officials experience a higher risk of being captured by them

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    Bibliographic Info

    Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 24/EC/2013.

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    Length: 22 pages
    Date of creation: 2013
    Date of revision:
    Publication status: Published in WP BRP Series: Economics / EC, February 2013, pages 1-22
    Handle: RePEc:hig:wpaper:24/ec/2013

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    Keywords: lobbying; corruption; business associations; imperfect institutions.;

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    1. Bennedsen, Morten & Feldmann, Sven E., 2000. "Informational Lobbying And Political Contributions," Working Papers 08-2000, Copenhagen Business School, Department of Economics.
    2. Mohtadi, Hamid & Roe, Terry, 1998. "Growth, lobbying and public goods," European Journal of Political Economy, Elsevier, vol. 14(3), pages 453-473, August.
    3. Jeffrey B. Nugent & Grigor. Sukiassyan, 2009. "Alternative Strategies For Firms In Oppressive And Corrupt States: Informality Or Formality Via Business Associations?," Contemporary Economic Policy, Western Economic Association International, vol. 27(4), pages 423-439, October.
    4. Bhagwati, Jagdish N., 1980. "Lobbying and welfare," Journal of Public Economics, Elsevier, vol. 14(3), pages 355-363, December.
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    7. Lagerlof, Johan, 1997. "Lobbying, information, and private and social welfare," European Journal of Political Economy, Elsevier, vol. 13(3), pages 615-637, September.
    8. Nauro F. Campos & Francesco Giovannoni, 2008. "Lobbying, Corruption and Other Banes," CEDI Discussion Paper Series 08-16, Centre for Economic Development and Institutions(CEDI), Brunel University.
    9. Richard Damania & Per Fredriksson & Muthukumara Mani, 2004. "The Persistence of Corruption and Regulatory Compliance Failures: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 363-390, February.
    10. Morten Bennedsen & Sven E. Feldmann & David Dreyer Lassen, 2009. "Strong Firms Lobby, Weak Firms Bribe: A survey-based analysis of the demand for influence and corruption," EPRU Working Paper Series 2009-08, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    11. Berry, S Keith, 1993. " Rent-Seeking with Multiple Winners," Public Choice, Springer, vol. 77(2), pages 437-43, October.
    12. Leonid Polishchuk & Alexei Savvateev, 2004. "Spontaneous (non)emergence of property rights," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 103-127, 03.
    13. Sun, Guang-Zhen & Ng, Yew-Kwang, 1999. " The Effect of Number and Size of Interest Groups on Social Rent Dissipation," Public Choice, Springer, vol. 101(3-4), pages 251-65, December.
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