State Capture and Controlling Owners of Firms
CEFIR Working Paper No. 42
Posted: 3 Aug 2004
Date Written: June 2004
How does the effect "state capture" depend the identity of the captor? We use a dataset on preferential treatment of selected firms by regional legislature and regulatory agencies in transitional Russia to show that the most effective and the least benign captors are "federal oligarchs" i.e., the firms within groups that have representation in more than two regions. Preferential treatments given to the federal oligarchs bring them higher than average benefits in terms of performance boost. Other firms in the region suffer more from capture by the federal oligarchs than when capture is carried out by other firms. In contrast, firms that are controlled by large regional owners do not have a strong effect of preferential treatments on either their own performance or performance of other regional firms.
JEL Classification: P26, P27, D71, D72
Suggested Citation: Suggested Citation