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Interest Groups, Veto Points And Electricity Infrastructure Deployment

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  • Witold J. Henisz
  • Bennet A. Zelner
Abstract
In this paper we examine the effects of interest group pressure and the structure of political institutions on infrastructure deployment by state-owned electric utilities in a panel of 78 countries during the period 1970 ??? 1994. We consider two factors that jointly influence the rate of infrastructure deployment: (1) the extent to which the consumer base consists of industrial consumers, which are capable of exerting discipline on political actors whose competing incentives are to construct economically inefficient ???white elephants??? to satisfy the demands of concentrated geographic interests, labor unions and construction firms; and (2) veto points in formal policymaking structures that constrain political actors, thereby reducing these actors??? sensitivity to interest group demands. A higher fraction of industrial customers provides political actors with stronger incentives for discipline, reducing the deployment of white elephants and thus the infrastructure growth rate, ceteris paribus. Veto points reduce political actors??? sensitivity to interest group demands in general and thus moderate the relationship between industrial interest group pressure and the rate of infrastructure deployment.

Suggested Citation

  • Witold J. Henisz & Bennet A. Zelner, 2004. "Interest Groups, Veto Points And Electricity Infrastructure Deployment," William Davidson Institute Working Papers Series 2004-711, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2004-711
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    More about this item

    Keywords

    Electricity; Institutional Environment; Investment; Regulation; interest group; state owned enterprise;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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