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Asset Specificity and the Political Behavior of Firms: Lobbying for Subsidies in Norway

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  • Alt, James E.
  • Carlsen, Fredrik
  • Heum, Per
  • Johansen, Kåre

Abstract

Previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets, but no studies have shown directly that firms behave as predicted. We adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms. In particular, we examine the lobbying choices of Norwegian firms in the 1980s. Given available subsidy funds from Norway's oil boom and some government decisions in the 1970s, firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves. Joint contacting of Parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets. Data analysis shows that asset specificity, as indicated by R&D intensity and job immobility, predicts joint contacting independently of plausible alternative explanatory variables like firm size and export orientation.

Suggested Citation

  • Alt, James E. & Carlsen, Fredrik & Heum, Per & Johansen, Kåre, 1999. "Asset Specificity and the Political Behavior of Firms: Lobbying for Subsidies in Norway," International Organization, Cambridge University Press, vol. 53(01), pages 99-116, December.
  • Handle: RePEc:cup:intorg:v:53:y:1999:i:01:p:99-116_44
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    Cited by:

    1. Pierre-Olivier Peytral, 2004. "Economie politique de la politique d'ouverture commerciale mixte : interactions entre les groupes sociaux et l'Etat," Post-Print halshs-00104875, HAL.
    2. Scheve, Kenneth F. & Slaughter, Matthew J., 2001. "What determines individual trade-policy preferences?," Journal of International Economics, Elsevier, vol. 54(2), pages 267-292, August.
    3. Eden, Lorraine & Molot, Maureen Appel, 2002. "Insiders, outsiders and host country bargains," Journal of International Management, Elsevier, vol. 8(4), pages 359-388.
    4. Irina Slinko & Ekaterina Zhuravskaya & Evgeny Yakovlev, 2005. "Laws for Sale: Evidence from Russia," American Law and Economics Review, Oxford University Press, vol. 7(1), pages 284-318.
    5. John M. de Figueiredo & James J. Kim, 2004. "When Do Firms Hire Lobbyists? The Organization of Lobbying at the Federal Communications Commission," NBER Working Papers 10553, National Bureau of Economic Research, Inc.
    6. Weymouth Stephen, 2013. "Firm lobbying and influence in developing countries: a multilevel approach," Business and Politics, De Gruyter, vol. 14(4), pages 1-26, January.
    7. Liebig, Stefan & Hense, Andrea, 2007. "Bedingungen und Folgen betriebsbedingter Entlassungen mit anschließender Wiederbeschäftigung in Deutschland," Duisburger Beiträge zur soziologischen Forschung 4/2007, University of Duisburg-Essen, Institute of Sociology.
    8. Achim Kemmerling, 2003. "Regional Input on the Social Dimension of Ezoneplus: Belgium, The Netherlands, France, Austria, and Germany," Eastward Enlargement of the Euro-zone Working Papers wp13c, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Mar 2003.
    9. de Figueiredo, John & Kim, James, 2004. "When Do Firms Hire Lobbyists? The Organization of Lobbying at the Federal Communications Commission," Working papers 4483-04, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    10. Michael Bolle & José Caétano & Jaakko Kiander & Vladimir Lavrac & Renzo Orsi & Tiiu Paas & Katarzyna Zukrowska, 2002. "The Eastward Enlargement of the Eurozone - State of the Art Report," Eastward Enlargement of the Euro-zone Working Papers wp02, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Jan 2002.
    11. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.

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