A Market for Connections

34 Pages Posted: 15 May 2012

See all articles by Topi Miettinen

Topi Miettinen

Hanken School of Economics - Helsinki Graduate School of Economics

Panu Poutvaara

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; ifo Institut - Leibniz-Institut fuer Wirtschaftsforschung an der Universitaet Muenchen e.V.; CESifo (Center for Economic Studies and Ifo Institute); CReAM; IZA Institute of Labor Economics

Date Written: May 15, 2012

Abstract

Government or company decisions on whom to hire are mostly delegated to politicians, public sector officials or human resources and procurement managers. Due to anti-corruption laws, agents cannot sell contracts or positions that they are delegated to decide upon. Even if bribing is ruled out, those interested in the spoils may invest in a good relationship with the deciding agents in order to be remembered when the nomination is made. In this paper, we analyze such markets for connections in the presence of convex costs of networking.

Keywords: nominations, rent-seeking, networks, politicians, procurement

JEL Classification: C790, D520, D720, D850, H570, L140

Suggested Citation

Miettinen, Topi and Poutvaara, Panu, A Market for Connections (May 15, 2012). CESifo Working Paper Series No. 3810, Available at SSRN: https://ssrn.com/abstract=2059961 or http://dx.doi.org/10.2139/ssrn.2059961

Topi Miettinen

Hanken School of Economics - Helsinki Graduate School of Economics ( email )

Helsinki
Finland

Panu Poutvaara (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

HOME PAGE: http://www.iiv.vwl.uni-muenchen.de/index.html

ifo Institut - Leibniz-Institut fuer Wirtschaftsforschung an der Universitaet Muenchen e.V. ( email )

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HOME PAGE: http://https://www.ifo.de/poutvaara-p

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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