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A market for connections

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  • Miettinen, Topi
  • Poutvaara, Panu

Abstract

Government or company decisions on whom to hire or whom to give a contract are mostly delegated to politicians, public sector officials or human resource and procurement managers. Due to anti-corruption laws, agents cannot sell contracts that they are delegated to decide upon. Even if bribing is ruled out, those interested in the spoils may invest in a good relationship with the deciding agents in order to be remembered when the decision is made. In this paper, we analyze such markets for connections in the presence of convex costs of networking.

Suggested Citation

  • Miettinen, Topi & Poutvaara, Panu, 2014. "A market for connections," European Journal of Political Economy, Elsevier, vol. 33(C), pages 37-52.
  • Handle: RePEc:eee:poleco:v:33:y:2014:i:c:p:37-52
    DOI: 10.1016/j.ejpoleco.2013.11.003
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    Cited by:

    1. Itkonen, Juha, 2017. "Efficiency and dependency in a network of linked permit markets," Research Discussion Papers 20/2017, Bank of Finland.
    2. Habib, Ahsan & Ranasinghe, Dinithi & Muhammadi, Abdul Haris & Islam, Ainul, 2018. "Political connections, financial reporting and auditing: Survey of the empirical literature," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 31(C), pages 37-51.
    3. Habib, Ahsan & Muhammadi, Abdul Haris & Jiang, Haiyan, 2017. "Political Connections and Related Party Transactions: Evidence from Indonesia," The International Journal of Accounting, Elsevier, vol. 52(1), pages 45-63.
    4. Miettinen, Topi & Poutvaara, Panu, 2015. "Parties as efficiency-improving gatekeepers in rent-seeking societies," European Journal of Political Economy, Elsevier, vol. 38(C), pages 87-101.

    More about this item

    Keywords

    Procurement; Nominations; Rent-seeking; Networks; Politicians;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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