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Lobbying, Corruption, and Regulatory Constraints: An Analysis of Eastern European Business Associations

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  • Kiselev, Eugene

Abstract

This paper examines lobbying and corruption as alternative ways of dealing with regulatory obstacles. I propose a model where firms facing a costly regulation can bribe a rule-enforcing bureaucrat to get around it, lobby the government to reduce its impact, or do both. I then use a firm-level dataset of Eastern European enterprises to examine whether firms use membership in a lobby group as a substitute for the bribe payments they make to rule-enforcing bureaucrats. The results indicate that firms who join lobby groups do not stop paying bribes to bureaucrats, and firms more impacted by corruption are no more likely to join a lobby group than their counterparts. On the other hand joining a lobby group increases the likelihood of a firm bribing legislators and other rule makers, suggesting that lobbying introduces the possibility of state capture by allowing firms access to policy makers that they wouldn't otherwise have.

Suggested Citation

  • Kiselev, Eugene, 2013. "Lobbying, Corruption, and Regulatory Constraints: An Analysis of Eastern European Business Associations," MPRA Paper 51936, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51936
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    References listed on IDEAS

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    1. Nauro Campos & Francesco Giovannoni, 2007. "Lobbying, corruption and political influence," Public Choice, Springer, vol. 131(1), pages 1-21, April.
    2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    3. Harstad, Bård & Svensson, Jakob, 2011. "Bribes, Lobbying, and Development," American Political Science Review, Cambridge University Press, vol. 105(1), pages 46-63, February.
    4. Bennedsen, Morten & Feldmann, Sven E., 2006. "Informational lobbying and political contributions," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 631-656, May.
    5. Nauro F. Campos & Francesco Giovannoni, 2008. "Lobbying, Corruption and Other Banes," William Davidson Institute Working Papers Series wp930, William Davidson Institute at the University of Michigan.
    6. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, vol. 89(5), pages 1327-1336, December.
    7. Grigor Sukiassyan & Jeffrey B. Nugent, 2011. "Lobbying or Information Provision," Eastern European Economics, Taylor & Francis Journals, vol. 49(2), pages 30-63, March.
    8. Doner, Richard F. & Schneider, Ben Ross, 2000. "Business Associations and Economic Development: Why Some Associations Contribute More Than Others," Business and Politics, Cambridge University Press, vol. 2(3), pages 261-288, November.
    9. Damania, Richard & Yalcýn, Erkan, 2008. "Corruption and Political Competition," Economics Discussion Papers 2008-7, Kiel Institute for the World Economy (IfW Kiel).
    10. William Pyle, 2005. "Contractual Disputes and the Channels for Interfirm Communication," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(2), pages 547-575, October.
    11. Gene M. Grossman & Elhanan Helpman, 2002. "Special Interest Politics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262571676, December.
    12. Morten Bennedsen & Sven Feldmann & David Dreyer Lassen, 2011. "Lobbying and Bribes - A Survey-Based Analysis of the Demand for Influence and Corruption," CESifo Working Paper Series 3496, CESifo.
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    Cited by:

    1. Abbas Khandan, 2022. "Externalities in the rent-seeking strategies of lobbying and bribery," Public Sector Economics, Institute of Public Finance, vol. 46(3), pages 421-450.

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    More about this item

    Keywords

    Lobbying; Corruption; Regulations;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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