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Interest Groups, Veto Points, and Electricity Infrastructure Deployment

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  • Henisz, Witold J.
  • Zelner, Bennet A.

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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  • Henisz, Witold J. & Zelner, Bennet A., 2006. "Interest Groups, Veto Points, and Electricity Infrastructure Deployment," International Organization, Cambridge University Press, vol. 60(01), pages 263-286, January.
  • Handle: RePEc:cup:intorg:v:60:y:2006:i:01:p:263-286_06
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    2. Straub, Stephane, 2008. "Infrastructure and growth in developing countries : recent advances and research challenges," Policy Research Working Paper Series 4460, The World Bank.
    3. Hatani, Faith, 2016. "Institutional plasticity in public-private interactions: Why Japan’s port reform failed," Journal of World Business, Elsevier, vol. 51(6), pages 923-936.
    4. Stephane Straub, 2011. "Infrastructure and Development: A Critical Appraisal of the Macro-level Literature," Journal of Development Studies, Taylor & Francis Journals, vol. 47(5), pages 683-708.
    5. 'Ofa, Siope Vakataki, 2009. "The WTO's telecommunications commitments and the credibility of telecommunications regulatory reforms in small island developing states," MPRA Paper 66184, University Library of Munich, Germany.
    6. Antonio Estache, 2016. "Institutions for Infrastructure in Developing Countries: What We Know and the Lot We still Need to Know," Working Papers ECARES ECARES 2016-27, ULB -- Universite Libre de Bruxelles.
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    8. Scott Gehlbach & Konstantin Sonin, 2004. "Businessman Candidates: Special-Interest Politics in Weakly Institutionalized Environments," William Davidson Institute Working Papers Series wp733, William Davidson Institute at the University of Michigan.
    9. Antonio Estache & Liam Wren-Lewis, 2011. "Anti-Corruption Policy in Theories of Sector Regulation," Chapters,in: International Handbook on the Economics of Corruption, Volume Two, chapter 9 Edward Elgar Publishing.
    10. Charles E. Stevens & En Xie & Mike W. Peng, 2016. "Toward a legitimacy-based view of political risk: The case of Google and Yahoo in China," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 945-963, May.
    11. Jeffrey T. Macher & John W. Mayo, 2015. "Influencing public policymaking: Firm-, industry-, and country-level determinants," Strategic Management Journal, Wiley Blackwell, vol. 36(13), pages 2021-2038, December.
    12. Carlo Cambini & Laura Rondi, 2010. "Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt," Working Papers 2010.69, Fondazione Eni Enrico Mattei.
    13. repec:bla:stratm:v:38:y:2017:i:1:p:114-140 is not listed on IDEAS
    14. 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.
    15. 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 wp731, William Davidson Institute at the University of Michigan.
    16. Estache, Antonio & Wren-Lewis, Liam, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," CEPR Discussion Papers 8082, C.E.P.R. Discussion Papers.
    17. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    18. Libman, Alexander, 2008. "Democracy and growth: is the effect non-linear?," MPRA Paper 17795, University Library of Munich, Germany.
    19. 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.

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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