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The political roots of intermediated lobbying: evidence from Russian firms and business associations

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Author Info

  • Andrei Govorun

    ()
    (National Research University Higher School of Economics)

  • Israel Marques

    ()
    (National Research University Higher School of Economics)

  • William Pyle

    ()
    (Economics Department, Middlebury College)

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    Abstract

    How does political competition shape the way that firms pursue legislative change? A rich political economy literature describes various ways in which firms influence the design and enforcement of laws, rules and regulations germane to their business activities. Although helpful, this literature is disconnected from work on legislative accountability and political concentration. Making a distinction poorly developed in prior research, we contrast firms that choose to influence policy directly, through un-mediated contacts with executive and legislative branch personnel, and those that do so indirectly, through lobby groups acting as intermediaries. We propose a simple theory that relates the relative costs of lobbying and the strategies firms select to the extent of political competition and concentration. As competition increases and concentration decreases in a region, the use of indirect channels of lobbying becomes more attractive (and vice versa). We test our theory using a survey of 1013 firms across 61 Russian regions. Exploiting substantial variation in political competition and concentration across Russia’s regions, we find that firms in politically competitive environments, where there is less concentration, are more likely to use business associations to influence their institutional environment. Using a survey of 315 business associations, we show that these effects may be explained by the variation of the willingness of regional decision-making officials to support more or less encompassing policies depending on local political environment

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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 46/EC/2013.

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    Length: 35 pages
    Date of creation: 2013
    Date of revision:
    Publication status: Published in WP BRP Series: Economics / EC, December 2013, pages 1-35
    Handle: RePEc:hig:wpaper:46/ec/2013

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    Keywords: lobbying; democratic institutions; business associations; Russia;

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    1. Guriev, Sergei & Yakovlev, Evgeny & Zhuravskaya, Ekaterina, 2008. "Interest Group Politics in a Federation," CEPR Discussion Papers 6671, C.E.P.R. Discussion Papers.
    2. Campos, Nauro F & Giovannoni, Francesco, 2006. "Lobbying, Corruption and Political Influence," CEPR Discussion Papers 5886, C.E.P.R. Discussion Papers.
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    9. Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 995-1025, November.
    10. Adserà, Alícia & Boix, Carles, 2002. "Trade, Democracy, and the Size of the Public Sector: The Political Underpinnings of Openness," International Organization, Cambridge University Press, vol. 56(02), pages 229-262, March.
    11. Sergei Guriev & Andrei Rachinsky, 2005. "The Role of Oligarchs in Russian Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 131-150, Winter.
    12. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
    13. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
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