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

39 Pages Posted: 12 Jul 2013

See all articles by Eugene Kiselev

Eugene Kiselev

Brandeis University International Business School

Date Written: July 11, 2013

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

JEL Classification: D72, D73, L51

Suggested Citation

Kiselev, Eugene, Lobbying, Corruption, and Regulatory Constraints: An Analysis of Eastern European Business Associations (July 11, 2013). Available at SSRN: https://ssrn.com/abstract=2292514 or http://dx.doi.org/10.2139/ssrn.2292514

Eugene Kiselev (Contact Author)

Brandeis University International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States

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