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We use survey responses by firms to examine the firm-level determinants and effects of political influence, their perception of corruption and prevalence of bribe paying. We find that: (a) measures of political influence and corruption/bribes are uncorrelated at the firm level; (b) firms that are larger, older, exporting, government-owned, are widely held and/or have fewer competitors have more political influence, perceive corruption to be less of a problem and pay bribes less often; (c) influence increases sales and government subsidies and in general makes the firm have a more positive view on the government. In sum, we show that "strong" firms use their influence to bend laws and regulations, whereas "weak" firms pay bribes to mitigate the costs of government intervention.

Political involvement in the operation of an enterprise, whether it is private or state owned, creates opportunities for interest groups to influence the allocation of resources. Resource allocation transfers rent both between unions and private owners within the firm and between these organized insiders and the disorganized taxpayers. I investigate how insiders`lobby activities distorts resource allocation in a state owned enterprise. Then I show that efficiency in labor allocation is improved when cash flow is rights affects efficiency in resource allocation when there are restrictions on side payments between the interest groups.

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompass both bureaucratic delegation from a government to a privatization agency and electoral delegation from voters to a government. We identify two powerfull effects of delegation when contracts are incomplete: The incentive effect increases the incentive part of service providers' remuneration and we show that strategic delegation may substitute formal incentive contracts. The bargaining effect improves the bargaining position vis a vis a private firm with market power and leads to a lower price for the service.

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompass both bureaucratic delegation from a government to a privatization agency and electoral delegation from voters to a government. We identify two powerfull effects of delegation when contracts are incomplete: The incentive effect increases the incentive part of service providers' remuneration and we show that strategic delegation may substitute formal incentive contracts. The bargaining effect improves the bargaining position vis a vis a private firm with market power and leads to a lower price for the service. Outsourcing, Strategic Delegation, Incentives, Incomplete Contracting, Market Power, Representative Democracy.

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompass both bureaucratic delegation from a government to a privatization agency and electoral delegation from voters to a government. We identify two powerfull effects of delegation when contracts are incomplete: The incentive effect increases the incentive part of service providers' remuneration and we show that strategic delegation may substitute formal incentive contracts. The bargaining effect improves the bargaining position vis a vis a private firm with market power and leads to a lower price for the service.

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompass both bureaucratic delegation from a government to a privatization agency and electoral delegation from voters to a government. We identify two powerfull effects of delegation when contracts are incomplete: The incentive effect increases the incentive part of service providers' remuneration and we show that strategic delegation may substitute formal incentive contracts. The bargaining effect improves the bargaining position vis a vis a private firm with market power and leads to a lower price for the service

We analyze the impact of a 75 pct. Break-Through rule on 1,035 European firms with dual class shares. In 3-5 pct. of the firms the controlling owners incur a direct loss of control, whereas in additional 11-17 pct. of the firms the controlling owners are likely to incur a control loss. Firms in Germany, Italy and the Scandinavian countries are more likely to incur a control loss. We continue to estimate the restrictions that the Break-Through rule puts on these firms' ability to issue new shares to outsiders without changing the control structure. We conclude that a significant number of the firms with dual class shares in the European Union will be affected by a 75 pct. Break- Through rule.

This paper studies how interest group lobbying of the bureaucracy affects policy outcomes and how it changes the legislature's willingness to delegate decision-making authority to the bureaucracy. We extend the standard model of delegation to account for interest group influence during the implementation stage of policy and apply it to different institutional structures of government. The paper addresses the following questions: First, how does the decision to delegate change when the bureaucratic agent is subject to external influence? What cost does this influence impose on the legislative principal? Finally, how susceptible are policy choices to bureaucratic lobbying under different government structures? In answering these questions, the paper seeks to provide a comparative theory of lobbying and to explain the different patterns of interest group activity across political systems.

Recent policy initiatives within the harmonization of European company laws have promoted a so-called "principle of proportionality" through proposals that regulate mechanisms opposing a proportional distribution of ownership and control. We scrutinize the foundation for these initiatives by analyzing the use of instruments to separate ownership from control across legal regimes in a sample of over 4,000 publicly traded firms from 14 Western European countries. First, we confirm the negative impact on firm value from disproportional ownership structures previously established in a sample of Asian firms by Claessens et al. (2002). Second, we show that dual class shares have a larger and more significant negative effect on firm value than pyramids and cross holdings. Third, we find that the impact of disproportionality and the underlying instruments is inversely related to the level of investor protection. Thus, dual class shares and pyramids substitute legal protection in countries with inadequate investor protection. Fourth, we find no evidence of a significant effect of disproportionality instruments on earnings performance. Finally, we discuss policy implications of these findings in relationship to the process of harmonization of the European capital markets.

This paper analyzes how the structure of the legislature affects interest groups' incentives to lobby. Lobbying is modelled as the strategic provision of information by an interest group to a multi-member legislature, and the effectiveness of lobbying lies in the ability of information to change the winning policy coalitions. We show that with a long enough time horizon for policymakers, the distinguishing feature between the U.S. Congress and European parliamentary systems—the vote of confidence procedure—reduces an agenda setter's willingness to change policy coalitions, and thus significantly lowers the incentives for interest group lobbying.

We analyze how the structure of organizational form of legislative institutions affects interest groups 'incentives to lobby.Lobbying is modelled the strategic provision of information by an interest group to a multi-person legislature.We show that the effectiveness of lobbying lies in changing the viable policy coalitions.We show in a multi-period policy framework that a distinguishing feature between the US Congress and European parliamentary systems – the vote of confidence procedure - can significantly change the incentives for interest group lobbying.

We analyze informational lobbying in the context of multi-member legislatures. We show that a single decision maker and a decentralized majoritarian legis- lature provide widely di .erent incentives for interest groups to acquire and transmit policy relevant information. The paper also shows a di .erence in the opportunity to a .ect policy through lobbying between a parliamentary legislature and a legislature with low voting cohesion,such as the U.S.Congress.We show that the incentives to lobby a parliamentary legislature are much lower than to lobby Congress.The results provide a rationale for why lobby groups are more active n the U.S.Congress. The key institutional feature to explain the di .erent behavior of lobby groups is the vote of con .dence procedure,which creates voting cohesion in a parlia- mentary system across policy issues.We show that the .exibility of creating majorities in the Congress creates an incentive for interest groups to play an active role in the design of policy in the congressional system,while the voting cohesion in the parliamentary system dissuades interest group 's incentive to engage in information provision.