Working Paper: NBER ID: w21857
Authors: Sebastian Galiani; Cheryl Long; Camila Navajas; Gustavo Torrens
Abstract: Two types of political conflicts of interest pervade many of the world’s societies. A horizontal conflict of interest arises when different constituencies support different policies, while a vertical conflict of interest emerges when those in charge of running the government acquire and retain rents in the process of doing so. We experimentally explore the connections between the two. We identify two sets of models that incorporate both types of conflicts: electoral models with endogenous rents, and common-agency models. We adapt these models to a laboratory setting and test their main theoretical predictions using two experiments. In both cases we find support for the proposition that more intense horizontal conflict leads to higher rents, which is one of the theoretical predictions of the parametrized electoral and common-agency models that we have used.
Keywords: political economy; horizontal conflict; vertical conflict; political rents; inequality; corruption
JEL Codes: D72; D74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| horizontal conflict (income inequality) (D31) | political rents (D72) |
| higher levels of income inequality (D31) | increased political rents (D72) |
| electoral uncertainty (K16) | political rents (D72) |
| electoral uncertainty (subset of subjects) (D72) | political rents (D72) |