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In 1967, Gordon Tullock asked why firms do not spend more on campaign contributions, despite the large rents that could be generated from political activities. We suggest in this paper that part of the puzzle could come from the fact that one important type of political activity has been neglected by the literature which focuses on campaign contributions or political connections. We call this neglected activity "asset freezing": situations in which firms delay lay-offs or invest in specific technologies to support local politicians' re-election objectives. In doing so, firms bear a potentially significant cost as they do not use a portion of their economic assets in the most efficient or productive way. The purpose of this paper is to provide a first theoretical exploration of this phenomenon. Building on the literature on corporate political resources, we argue that a firm's economic assets can be evaluated based on their degree of "political freezability," which depends on the flexibility of their use and on their value for policy-makers. We then develop a simple model in which financial contributions and freezing assets are alternative options for a firm willing to lawfully influence public policy-making, and derive some of our initial hypotheses more formally.

The determinants of the structure of civil service in the US, in particular the use of political appointees vs career civil servants, is examined through development & application of a multiperiod single principal-single agent model of poltical bureaucracy. Model solutions for aligned & opposed principal preferences & the effects of binding individual rationality constraints are presented. The model accurately portrays the evolution of civil service, the high proportion of political appointees in the US vs other Western democracies, & the variance in political appointees in local governments. The main determinants of the US civil service structure are the separation of the legislative & executive branches of government, which branch of government holds effective power, party discipline, & the expected life in office for members of Congress. 1 Table, 2 Figures, 1 Appendix, 39 References. Adapted from the source document.

This paper analyzes a multiperiod delegation model with two principals and an agent. The purpose of the model is to explore the determinants of civil service structure, in particular, the use of political appointees (short lived agents) vs. civil servants (long lived agents). We see this process as a bargaining problem between two principals, Congress, a long lived principal, and the President, a short lived one. Our model is consistent with three aspects of the U.S. Civil Service: its evolution during this century, the high proportion of political appointees in the higher civil service with respect to its counterparts in occidental democracies with parliamentary systems, and the different scope of civil service coverage in local governments in the United States. We argue that these differences in the organization of civil services across countries and over time can be understood as the result of a game among multiple principals for the control of the bureaucracy, with the main determinants being the extent by which the legislative and executive bodies are aligned in their interests, who is politically more powerful, whether they have different political horizons, and to what extent political parties control their representatives at both the executive and legislative bodies. We model this interaction by letting the principals have different horizons. One principal lives through the entire game and faces a series of short lived principals. The emphasis of the model is on the choice of the agent, who can be either short or long lived. We analyze the optimal agent type from the perspective of each of the principals. Since a longer horizon agent can be better controlled by the long lived principal, the latter will prefer a long lived agent. The short lived principals, on the other hand, may prefer short or long lived agents. We show that if the two types of principals have opposed preferences in relation to the outcome of the agent's action, then the short lived principals will prefer a short lived agent. Otherwise, the short lived principal alive in the first period will also prefer long lived agents. ; Facultad de Ciencias Económicas

This paper examines how the main characteristics of Argentina's policymaking process (PMP) affect the productivity of its economy using the conceptual framework presented in Murillo, Scartascini and Tommasi (2008), Stein et al. (2008), Spiller and Tommasi (2007), and IDB (2005). First, the paper complements existing descriptions of the PMP by considering private agents and elaborating on structural characteristics possibly conducive to policymaking instability. Second, the paper illustrates the (negative) impact of Argentina's lowquality and myopic PMP equilibrium on productivity by examining two key areas: provision of infrastructure services and agricultural policy. Finally, the paper explores the PMP at the local level of government (municipalities and local communities), finding that it mimics the flaws observed at the federal level.