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Businessman Candidates

Authors


  • We thank Jim Adams, Jim Alt, Lee Benham, Jen Brick, Barry Burden, David Canon, Michael Carter, John Coleman, Tim Colton, Ian Coxhead, John Duggan, Johnny Easter, Guido Friebel, Sergei Guriev, Charles Franklin, Ted Gerber, Kathryn Hendley, Yoshiko Herrera, Paul Hutchcroft, Nikolai Petrov, Jim Robinson, Gerard Roland, Caroline Savage, Alexandra Suslina, Dan Treisman, Murray Weidenbaum, Dave Weimer, the editor, and three anonymous referees for many helpful comments. Much useful feedback was received from seminar and conference participants at Harvard, NYU, UC Berkeley, UW Madison, Washington University, and meetings of the European Economic Association, the Game Theory Congress, the International Society for New Institutional Economics, the Midwest Political Science Association, the North American Econometric Society, and the Public Choice Society. An online appendix with supporting material is available at http://users.polisci.wisc.edu/gehlbach/documents/GSZ_BC_appendix.pdf.

Scott Gehlbach is Associate Professor of Political Science, University of Wisconsin, Madison, 110 North Hall, 1050 Bascom Mall, Madison, WI 53706 (gehlbach@polisci.wisc.edu). Konstantin Sonin is Professor of Economics, New Economic School, CEFIR, and CEPR, Nakhimovskii Prospekt 47, 117418 Moscow, Russia (ksonin@nes.ru). Ekaterina Zhuravskaya is Professor of Economics, Paris School of Economics, EHESS, and New Economic School, 48 Boulevard Jourdan, 75014 Paris, France (ezhuravskaya@nes.ru).

Abstract

Why and when do businessmen run for public office rather than rely upon other means of influence? What are the implications of their participation for public policy? We show formally that “businessman candidacy” and public policy are jointly determined by the institutional environment. When institutions that hold elected officials accountable to voters are strong, businessmen receive little preferential treatment and are disinclined to run for office. When such institutions are weak, businessmen can subvert policy irrespective of whether they hold office, but they may run for office to avoid the cost of lobbying elected officials. Evidence from Russian gubernatorial elections supports the model's predictions. Businessman candidates emerge in regions with low media freedom and government transparency, institutions that raise the cost of reneging on campaign promises. Among regions with weaker institutions, professional politicians crowd out businessmen when the rents from office are especially large.

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