Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 698: Political Rents in a Non-Corrupt Democracy

Helena Svaleryd () and Jonas Vlachos ()
Additional contact information
Helena Svaleryd: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Jonas Vlachos: Stockholm University, Postal: Department of Economics, SE-106 91 Stockholm, Sweden

Abstract: A fundamental problem in all political systems is that the people in power may extract rents to the detriment of the general public. In a democracy, electoral competition and information provided by the media may keep such rent extraction at bay. We develop a simple model where rents are decreasing in the degree of political competition and voter information. In line with our theoretical predictions, we find that both increased political competition and increased local media coverage substantially reduce direct measures of legal political rents among local governments in a non-corrupt democracy (Sweden).

Keywords: Accountability; Political Competition; Media; Political Rents

JEL-codes: D72; H10; H70

57 pages, First version: February 16, 2007. Revised: September 25, 2008. Earlier revisions: March 26, 2008.

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