Management Papers

Document Type

Journal Article

Date of this Version

1-2006

Publication Source

International Organization

Volume

60

Issue

1

Start Page

263

Last Page

286

DOI

10.1017/S0020818306060085

Abstract

In this article we examine the effects of interest group pressure and the structure of political institutions on infrastructure deployment by state-owned electric utilities in a panel of seventy-eight countries during the period 1970–94. We consider two factors that jointly influence the rate of infrastructure deployment: (1) the extent to which the consumer base consists of industrial consumers, which are capable of exerting discipline on political actors whose competing incentives are to construct economically inefficient “white elephants” to satisfy the demands of concentrated geographic interests, labor unions, and national engineering and construction lobbies; and (2) veto points in formal policymaking structures that constrain political actors, thereby reducing these actors' sensitivity to interest group demands. A higher fraction of industrial customers provides political actors with stronger incentives for discipline, reducing the deployment of white elephants and thus the infrastructure growth rate, ceteris paribus. Veto points reduce political actors' sensitivity to interest group demands in general and thus moderate the relationship between industrial interest group pressure and the rate of infrastructure deployment.

Copyright/Permission Statement

© 2006 by The IO Foundation.

Reprinted with permission.

Comments

Both authors contributed equally and list their names alphabetically on this joint work.

Keywords

electricity, institutional environment, investment, regulation, interest group, state owned enterprise

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Date Posted: 27 November 2017

This document has been peer reviewed.