American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Sweetening the Deal? Political Connections and Sugar Mills in India
American Economic Journal: Applied Economics
vol. 4,
no. 3, July 2012
(pp. 43–63)
Abstract
Political control of firms is prevalent across the world. Evidence suggests that firms profit from political connections, and politicians derive benefit from control over firms. This paper investigates an alternative mechanism through which politicians may benefit electorally from connected firms, examining sugar mills in India. I find evidence of embezzlement in politically controlled mills during election years, reflected in lower prices paid to farmers for cane. This result complements the literature on political cycles by demonstrating how campaign funds are raised rather than used. Politicians may recompense farmers upon getting elected, possibly explaining how they can get away with pilferage. (JEL D72, G34, L66, O13, O17, Q12, Q13)Citation
Sukhtankar, Sandip. 2012. "Sweetening the Deal? Political Connections and Sugar Mills in India." American Economic Journal: Applied Economics, 4 (3): 43–63. DOI: 10.1257/app.4.3.43Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q13 Agricultural Markets and Marketing; Cooperatives; Agribusiness
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