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

Eugene Kiselev

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Lobbying; Corruption; Regulations (search for similar items in EconPapers)
JEL-codes: D72 D73 L51 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-pol and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:51936

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