Logrolling Under Fragmented Authoritarianism: Theory and Evidence from China
University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 333
90 Pages Posted: 8 Apr 2016 Last revised: 19 Apr 2016
Date Written: April 3, 2016
Autocratic policy-making processes have been under studied both theoretically and empirically, while most literature on autocracies has assumed them to have a monolithic and top-down nature. This paper seeks to remedy this deficiency by focusing on logrolling among interest groups in fragmented autocracies, and tries to pick apart the black-box of decision making in autocracies. In particular, we focus on China where decision making exemplifies a process of logrolling among key actors in the political system. The key question in this paper is: what are the effects of the logrolling of parochial interest groups on state policies and social welfare in autocracies?
We address this question both theoretically and empirically. The theoretical model helps us to focus on a specific distortion in resource allocation because of logrolling, while the econometric results confirm our theoretical prediction in a very robust way. To find out the distinctive consequences of autocratic logrolling on state policy and social welfare, we compare the policy outcomes under logrolling with the policy outcomes under different decision-making rules. We find policy outcomes under logrolling are characterized by excessive spending on all the interest groups’ preferred goods and insufficient spending on public goods. Finally, the paper provides empirical evidence on autocratic logrolling by studying the effects of the interaction between two vertical bureaucracies in China – the Ministry of Civil Affairs and the Ministry of Health. In particular, we test the predictions of our model and identify the effects of logrolling in autocracies. Building on the existing literature, we introduce new approaches, including natural experiment and placebo test, to empirically test the existence of logrolling and identify its effects. We show that the direction of inefficiency on resource allocation is in accordance with the prediction in our theoretical model.
Keywords: Authoritarianism, Policy Making, Logrolling, Fragmented Authoritarianism, China
JEL Classification: D72, H11, H41, P48
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