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Strong Firms Lobby, Weak Firms Bribe: A survey-based analysis of the demand for influence and corruption

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Author Info

  • Morten Bennedsen

    (INSEAD)

  • Sven E. Feldmann

    (University of Melbourne)

  • David Dreyer Lassen

    (Department of Economics, University of Copenhagen)

Abstract

We use survey responses by firms to examine the firm-level determinants and effects of political influence, their perception of corruption and prevalence of bribe paying. We find that: (a) measures of political influence and corruption/bribes are uncorrelated at the firm level; (b) firms that are larger, older, exporting, government-owned, are widely held and/or have fewer competitors, have more political influence, perceive corruption to be less of a problem and pay bribes less often; (c) influence increases sales and government subsidies and in general makes the firm have a more positive view on the government. In sum, we show that strong firms use their influence to bend laws and regulations, whereas weak firms pay bribes to mitigate the costs of government intervention.

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Bibliographic Info

Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 2009-08.

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Length: 25 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:kud:epruwp:09-08

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Cited by:
  1. Andrei Govorun, 2013. "The choice of lobbying strategy: direct contacts with officials or mediation via business associations," HSE Working papers WP BRP 24/EC/2013, National Research University Higher School of Economics.
  2. Martin Gregor, 2011. "Corporate lobbying: A review of the recent literature," Working Papers IES 2011/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.

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