Asset freezing, corporate political resources and the Tullock paradox

Details

Ressource 1Download: BIB_85621E531C8B.P001.pdf (1394.13 [Ko])
State: Public
Version: Final published version
Serval ID
serval:BIB_85621E531C8B
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Asset freezing, corporate political resources and the Tullock paradox
Journal
Business and Politics
Author(s)
Bonardi J.-P., Urbiztondo S.
ISSN
1469-3569 (Online)
Publication state
Published
Issued date
2013
Peer-reviewed
Oui
Volume
15
Number
3
Pages
275-293
Language
english
Abstract
In 1967, Gordon Tullock asked why firms do not spend more on campaign contributions, despite the large rents that could be generated from political activities. We suggest in this paper that part of the puzzle could come from the fact that one important type of political activity has been neglected by the literature which focuses on campaign contributions or political connections. We call this neglected activity "asset freezing": situations in which firms delay lay-offs or invest in specific technologies to support local politicians' re-election objectives. In doing so, firms bear a potentially significant cost as they do not use a portion of their economic assets in the most efficient or productive way. The purpose of this paper is to provide a first theoretical exploration of this phenomenon. Building on the literature on corporate political resources, we argue that a firm's economic assets can be evaluated based on their degree of "political freezability," which depends on the flexibility of their use and on their value for policy-makers. We then develop a simple model in which financial contributions and freezing assets are alternative options for a firm willing to lawfully influence public policy-making, and derive some of our initial hypotheses more formally.
Create date
28/09/2013 20:29
Last modification date
20/08/2019 14:44
Usage data