In this article 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 seventy-eight countries
during the period 1970–94. 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 national engineering and construction lobbies; 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.Both authors contributed equally and list their
names alphabetically on this joint work. Both authors acknowledge funding
for this research from the University of California Energy Institute.
Zelner acknowledges additional funding from the Lynde and Harry Bradley
Foundation and the Edgar F. Kaiser Chair at the Haas School of Business,
University of California, Berkeley. Henisz acknowledges additional funding
from the Reginald H. Jones Center for Management Policy, Strategy, and
Organization at the Wharton School, University of Pennsylvania. Thanks to
Severin Borenstein, Rachel Croson, José de la Torre, Alexander
Dyck, Tom Gilligan, Florencio Lopez-de-Silanes, Edward Mansfield, Mathew
McCubbins, Will Mitchell, David Mowery, Jeffrey Nugent, Dennis Quinn,
George Tsebelis, Joel Waldfogel, Oliver Williamson, and Jan Zabojnik for
their comments on previous drafts. Any errors are the responsibility of
the authors.
