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Interest Groups, Veto Points And Electricity Infrastructure Deployment

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  • Witold J. Henisz

    ()

  • Bennet A. Zelner

    ()

Abstract

In this paper we examine the effects of interest group pressure and the structure of political institutions on infrastructure deployment by state-owned electric utilities in a panel of 78 countries during the period 1970 – 1994. We consider two factors that jointly influence the rate of infrastructure deployment: (1) the extent to which the consumer base consists of industrial consumers, which are capable of exerting discipline on political actors whose competing incentives are to construct economically inefficient “white elephants” to satisfy the demands of concentrated geographic interests, labor unions and construction firms; and (2) veto points in formal policymaking structures that constrain political actors, thereby reducing these actors’ sensitivity to interest group demands. A higher fraction of industrial customers provides political actors with stronger incentives for discipline, reducing the deployment of white elephants and thus the infrastructure growth rate, ceteris paribus. Veto points reduce political actors’ sensitivity to interest group demands in general and thus moderate the relationship between industrial interest group pressure and the rate of infrastructure deployment.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2004-711.

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Length: 45 pages
Date of creation: 01 Jul 2004
Date of revision:
Handle: RePEc:wdi:papers:2004-711

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Keywords: Electricity; Institutional Environment; Investment; Regulation; interest group; state owned enterprise;

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Cited by:
  1. Libman, Alexander, 2008. "Democracy and growth: is the effect non-linear?," MPRA Paper 17795, University Library of Munich, Germany.
  2. Estache, Antonio & Wren-Lewis, Liam, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8082, C.E.P.R. Discussion Papers.
  3. Carlo Cambini & Laura Rondi, 2010. "Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt," Working Papers, Fondazione Eni Enrico Mattei 2010.69, Fondazione Eni Enrico Mattei.
  4. Straub, Stephane, 2008. "Infrastructure and growth in developing countries : recent advances and research challenges," Policy Research Working Paper Series 4460, The World Bank.
  5. Duso, Tomaso & Seldeslachts, Jo, 2010. "The political economy of mobile telecommunications liberalization: Evidence from the OECD countries," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 199-216, June.
  6. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES, ULB -- Universite Libre de Bruxelles 2008_018, ULB -- Universite Libre de Bruxelles.
  7. Era Dabla-Norris & Jim Brumby & Annette Kyobe & Zac Mills & Chris Papageorgiou, 2012. "Investing in public investment: an index of public investment efficiency," Journal of Economic Growth, Springer, Springer, vol. 17(3), pages 235-266, September.
  8. Scott Gehlbach & Konstantin Sonin, 2004. "Businessman Candidates: Special-Interest Politics in Weakly Institutionalized Environments," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp733, William Davidson Institute at the University of Michigan.
  9. Vachani, Sushil & Doh, Jonathan P. & Teegen, Hildy, 2009. "NGOs' influence on MNEs' social development strategies in varying institutional contexts: A transaction cost perspective," International Business Review, Elsevier, Elsevier, vol. 18(5), pages 446-456, October.
  10. Stephane Straub, 2011. "Infrastructure and Development: A Critical Appraisal of the Macro-level Literature," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 47(5), pages 683-708.
  11. Clifton, Judith & Díaz-Fuentes, Daniel & Revuelta, Julio, 2009. "Explaining Telecoms and Electricity Internationalization in the European Union: A Political Economy Perspective," MPRA Paper 33037, University Library of Munich, Germany.
  12. Aghassi Mkrtchyan, 2004. "Impact Of Regulated Price Adjustments On Price Variability In A Very Low Inflation Transition Economy: Case Of Armenia," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp731, William Davidson Institute at the University of Michigan.

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