Working Paper: CEPR ID: DP4822
Authors: Scott Gehlbach; Konstantin Sonin
Abstract: We initiate examination of the political boundaries of the firm by exploring the phenomenon of ‘businessman candidates’: business owners and managers who bypass conventional means of political influence to run for public office themselves. We argue that in-house production of political influence will be more likely in institutional environments where candidates find it difficult to make binding campaign promises. When campaign promises are binding, then a businessman may always pay a professional politician to run on the platform that political competition would otherwise compel the businessman to adopt. In contrast, when commitment to a campaign platform is impossible, then candidate identity matters for the policies that will be adopted ex post, implying that a businessman may choose to run for office if the stakes are sufficiently large. We illustrate our arguments through discussion of gubernatorial elections in postcommunist Russia, where businessmen frequently run for public office, institutions to encourage elected officials to keep their campaign promises are weak, and competition for rents is intense.
Keywords: businessman candidates; citizen candidates; elections; institutions; political economy
JEL Codes: D72; N40; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Weakly institutionalized environments (O17) | More businessman candidates (M59) |
| Lack of commitment mechanisms (D86) | Decision-making of potential candidates (D79) |
| Rent competition (R21) | Likelihood of businessman candidacies (D79) |
| Stronger institutional contexts (O17) | Less businessman candidates (D79) |