IDEAS home Printed from https://ideas.repec.org/a/bpj/buspol/v15y2013i3p275-293n3.html
   My bibliography  Save this article

Asset freezing, corporate political resources and the Tullock paradox

Author

Listed:
  • Bonardi Jean-Philippe

    (Faculty of Business and Economics (HEC), University of Lausanne, Switzerland)

  • Urbiztondo Santiago

    (Fundación de Investigaciones Económicas Latinoamericanas (FIEL), Argentina)

Abstract

In 1967, Gordon Tullock asked why firms do not spend more on campaign contributions, despite the large rents that could be generated from political activities. We suggest in this paper that part of the puzzle could come from the fact that one important type of political activity has been neglected by the literature which focuses on campaign contributions or political connections. We call this neglected activity “asset freezing”: situations in which firms delay lay-offs or invest in specific technologies to support local politicians’ re-election objectives. In doing so, firms bear a potentially significant cost as they do not use a portion of their economic assets in the most efficient or productive way. The purpose of this paper is to provide a first theoretical exploration of this phenomenon. Building on the literature on corporate political resources, we argue that a firm’s economic assets can be evaluated based on their degree of “political freezability,” which depends on the flexibility of their use and on their value for policy-makers. We then develop a simple model in which financial contributions and freezing assets are alternative options for a firm willing to lawfully influence public policy-making, and derive some of our initial hypotheses more formally.

Suggested Citation

  • Bonardi Jean-Philippe & Urbiztondo Santiago, 2013. "Asset freezing, corporate political resources and the Tullock paradox," Business and Politics, De Gruyter, vol. 15(3), pages 275-293, October.
  • Handle: RePEc:bpj:buspol:v:15:y:2013:i:3:p:275-293:n:3
    DOI: 10.1515/bap-2012-0034
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bap-2012-0034
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    File URL: https://libkey.io/10.1515/bap-2012-0034?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean‐Philippe Bonardi, 2004. "Global and political strategies in deregulated industries: the asymmetric behaviors of former monopolies," Strategic Management Journal, Wiley Blackwell, vol. 25(2), pages 101-120, February.
    2. Bonardi, Jean-Philippe & Holburn, Guy & Vanden Bergh, Rick, 2006. "Nonmarket performance: Evidence from U.S. electric utilities," MPRA Paper 14437, University Library of Munich, Germany.
    3. Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Entry and Asymmetric Lobbying: Why Governments Pick Losers," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 1064-1093, September.
    4. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
    5. Giuseppe Dari-Mattiacci & Francesco Parisi, 2005. "Rents, dissipation and lost treasures: Rethinking Tullock's paradox," Public Choice, Springer, vol. 124(3), pages 411-422, September.
    6. Milyo, Jeffrey & Primo, David & Groseclose, Timothy, 2000. "Corporate PAC Campaign Contributions in Perspective," Business and Politics, Cambridge University Press, vol. 2(1), pages 75-88, April.
    7. Brainard, S. Lael & Verdier, Thierry, 1997. "The political economy of declining industries: Senescent industry collapse revisited," Journal of International Economics, Elsevier, vol. 42(1-2), pages 221-237, February.
    8. David P. Baron, 2001. "Theories of Strategic Nonmarket Participation: Majority‐Rule and Executive Institutions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 47-89, March.
    9. Tripathi Micky & Ansolabehere Stephen & Jr James M. Snyder, 2002. "Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act," Business and Politics, De Gruyter, vol. 4(2), pages 1-26, August.
    10. Bonardi, Jean-Philippe, 2008. "The internal limits to firms' nonmarket activities," MPRA Paper 14500, University Library of Munich, Germany.
    11. Bonardi, Jean-Philippe, 1999. "Market and Nonmarket Strategies During Deregulation: The Case of British Telecom," Business and Politics, Cambridge University Press, vol. 1(2), pages 203-231, August.
    12. Tripathi, Micky & Ansolabehere, Stephen & Snyder, James M., 2002. "Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act," Business and Politics, Cambridge University Press, vol. 4(2), pages 131-155, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vincent Tawiah & Abdulrasheed Zakari & Yan Wang, 2022. "Partisan political connections, ethnic tribalism, and firm performance," Review of Quantitative Finance and Accounting, Springer, vol. 58(4), pages 1331-1362, May.
    2. Wu Wei & Xuan Zhao & Mei Li & Malcolm Warner, 2016. "Integrating nonmarket and market resources, strategy and performance in Chinese enterprises: a review of the field and a resource-based empirical study," Asia Pacific Business Review, Taylor & Francis Journals, vol. 22(2), pages 220-237, April.
    3. Martin Gregor, 2016. "Tullock's Puzzle in Pay-and-Play Lobbying," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 368-389, November.
    4. Davin Raiha, 2018. "Economic influence activities," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 830-843, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kim Jin-Hyuk, 2008. "Corporate Lobbying Revisited," Business and Politics, De Gruyter, vol. 10(2), pages 1-25, September.
    2. Brian Kelleher Richter & Krislert Samphantharak & Jeffrey F. Timmons, 2009. "Lobbying and Taxes," American Journal of Political Science, John Wiley & Sons, vol. 53(4), pages 893-909, October.
    3. Richard Damania & Per G. Fredriksson & Thomas Osang, 2005. "Polluters and Collective Action: Theory and Evidence," Southern Economic Journal, John Wiley & Sons, vol. 72(1), pages 167-185, July.
    4. Seung-Hyun Lee & Mine Ozer & Yoon-Suk Baik, 2018. "The impact of political connections on government bailout: the 2008 credit crunch in the United States," Economics of Governance, Springer, vol. 19(4), pages 299-315, November.
    5. Rui J. P. De Figueiredo & Geoff Edwards, 2007. "Does Private Money Buy Public Policy? Campaign Contributions and Regulatory Outcomes in Telecommunications," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 547-576, September.
    6. Bombardini, Matilde & Trebbi, Francesco, 2011. "Votes or money? Theory and evidence from the US Congress," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 587-611, August.
    7. Benjamin J. McMichael, 2017. "The Demand for Healthcare Regulation: The Effect of Political Spending on Occupational Licensing Laws," Southern Economic Journal, John Wiley & Sons, vol. 84(1), pages 297-316, July.
    8. Martin Gregor, 2016. "Tullock's Puzzle in Pay-and-Play Lobbying," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 368-389, November.
    9. Tahiru Azaaviele Liedong, 2021. "Responsible Firm Behaviour in Political Markets: Judging the Ethicality of Corporate Political Activity in Weak Institutional Environments," Journal of Business Ethics, Springer, vol. 172(2), pages 325-345, August.
    10. Alexander Fink, 2017. "Donations to Political Parties: Investing Corporations and Consuming Individuals?," Kyklos, Wiley Blackwell, vol. 70(2), pages 220-255, May.
    11. Tatyana Chesnokova, 2010. "Lobby Interaction and Trade Policy," School of Economics and Public Policy Working Papers 2010-04, University of Adelaide, School of Economics and Public Policy.
    12. Cotton, Christopher, 2012. "Pay-to-play politics: Informational lobbying and contribution limits when money buys access," Journal of Public Economics, Elsevier, vol. 96(3), pages 369-386.
    13. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2011. "Do interest groups affect US immigration policy?," Journal of International Economics, Elsevier, vol. 85(1), pages 114-128, September.
    14. Woon Leong Lin, 2018. "Do Firm’s Organisational Slacks Influence the Relationship between Corporate Lobbying and Corporate Financial Performance? More Is Not Always Better," IJFS, MDPI, vol. 7(1), pages 1-23, December.
    15. Christopher Cotton, 2008. "Access Fees in Politics," Working Papers 0903, University of Miami, Department of Economics.
    16. Christopher Cotton, 2010. "Pay-to-Play Politics: Informational lobbying and campaign finance reform when contributions buy access," Working Papers 2010-22, University of Miami, Department of Economics.
    17. Adam Fremeth & Brian Kelleher Richter & Brandon Schaufele, 2018. "Spillovers from regulating corporate campaign contributions," Journal of Regulatory Economics, Springer, vol. 54(3), pages 244-265, December.
    18. Bombardini, Matilde & Trebbi, Francesco, 2012. "Competition and political organization: Together or alone in lobbying for trade policy?," Journal of International Economics, Elsevier, vol. 87(1), pages 18-26.
    19. Martimort, David, 2019. ""When Olson Meets Dahl": From Inefficient Groups Formation to Inefficient Policy-Making," CEPR Discussion Papers 13843, C.E.P.R. Discussion Papers.
    20. Olimpia Cutinelli Rendina, 2023. "Lobbying or Innovation: Who Does What Against Foreign Competition," Working Papers halshs-03970033, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:buspol:v:15:y:2013:i:3:p:275-293:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.