Take Action

Home | Faculty & Research Overview | Research

Research Details

Bribes, Lobbying and Development, American Political Science Review

Abstract

When faced with a regulatory constraint, firms can either comply, bribe the regulator to get around the rule, or lobby the government to relax it. We analyze this choice, and its consequences, in a simple dynamic model. In equilibrium, when the level of development is low, firms are more inclined to bend the rule through bribing but they tend to switch to lobbying when the level of development is sufficiently high. Bribing, however, is associated with hold-up problems, which discourage firms from investing. If the hold-up problems are severe, firms will never invest enough to make lobbying worthwhile. The country may then be stuck in a poverty trap with bribing forever. The model can account for the common perception that bribing is relatively more common in poor countries while lobbying is relatively more common in rich ones.

Type

Article

Author(s)

Bard Harstad, Jakob Svensson

Date Published

2011

Citations

Harstad, Bard, and Jakob Svensson. 2011. Bribes, Lobbying and Development. American Political Science Review. 105(1): 46-63.

LINK
KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more

Take Action