Munich Personal RePEc Archive

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

Kiselev, Eugene (2013): Lobbying, Corruption, and Regulatory Constraints: An Analysis of Eastern European Business Associations.

[img]
Preview
PDF
MPRA_paper_51936.pdf

Download (428kB) | Preview

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.

Logo of the University Library LMU Munich
MPRA is a RePEc service hosted by
the University Library LMU Munich in Germany.