Oligarch Networks

John S. Earle (George Mason University)
Scott Gehlbach (University of Wisconsin–Madison)
Anton Shirikov (University of Wisconsin–Madison)
Solomiya Shpak (George Mason University)

Abstract : In countries with weak institutions, oligarchs often hide enterprise ownership behind related individuals, holding companies, and other entities to protect assets from competitors and the state. Connections among such entities represent a network that characterizes the nature of oligarch control. We argue that the optimal choice of network resolves a tradeoff between opacity and loyalty—more distant and diffuse ownership reduces the transparency of oligarch ownership, at the cost of increased risk of betrayal. We explore this idea in the setting of contemporary Ukraine. Exploiting data from business journalists, firm registries, and records of joint stock companies, we characterize the ownership networks of Ukrainian oligarchs. Seeking to explain variation in the character of such networks, we explore the role of enterprise and oligarch characteristics that affect the tradeoff between opacity and loyalty.

Effects of Local Regulation on Neighboring Jurisdictions: Evidence from Mining Ordinances

Alexey Kalinin (University of Wisconsin-Madison)
Dominic Parker (University of Wisconsin-Madison)
Daniel Phaneuf (University of Wisconsin-Madison)

Abstract : The environmental federalism literature describes local regulatory control as a double-edged sword. It empowers jurisdictions to solve their local problems, but to discount spillover impacts on neighboring jurisdictions. We study this tradeoff in the context of a regional ‘frac sand’ mining boom in Wisconsin, which began around 2010 and was induced by the hydraulic fracturing surge across the U.S. We exploit a 2012 state Supreme Court ruling, permitting township-level mining ordinances, to study the effects of local regulation on mining activity, resident exposure to disamenities, and property values. Consistent with complaints of heightened traffic congestion and roadway risks, we find large effects of mine openings on accidents involving industrial trucks ranging from 9 to 13% per mine but also positive effects of mine openings on township property values, ranging from 6 to 17% per mine. Township ordinances significantly reduce the own-township accident effects of mine openings, and enhance individual property values within the regulated townships. Mine openings under ordinances increase truck accidents and decrease property values in neighboring jurisdictions, however. The results, although preliminary, suggest the net value of local regulatory authority may be negative once spillover impacts are considered.

Why Not Taxation and Representation? a Note on the American Revolution

Gustavo Torrens (Indiana University)
Sebastian Galiani (University of Maryland)

Abstract : Why did the most prosperous colonies in the British Empire mount a rebellion? Even more puzzling, why didn't the British agree to have American representation in Parliament and quickly settle the dispute peacefully? At first glance, it would appear that a deal could have been reached to share the costs of the global public goods provided by the Empire in exchange for more political autonomy and/or formal representation for the colonies. (At least, this was the view of men of the time such as Lord Chapman, Thomas Pownall and Adam Smith.) We argue, however, that the incumbent government in Great Britain, controlled by the landed gentry, feared that giving political concessions to the colonies would undermine the position of the dominant coalition, strengthen the incipient democratic movement, and intensify social pressures for the reform of a political system based on land ownership. In particular, allowing Americans to be represented in Parliament was problematic because American elites could not credibly commit to refuse to form a coalition with the British opposition. Consequently, the only realistic options were to maintain the original colonial status or fight a full-scale war of independence.

Collective Action, White Flight, and the Origins of Municipal Segregation Laws

Werner Troesken (University of Pittsburgh)
Randall Walsh (University of Pittsburgh)

Abstract : Residential segregation is among the most durable and salient features of American urban life. It is widely recognized that governments at all levels have played at least some role in promoting and sustaining residential segregation. At the federal level, for example, urban renewal projects, federally-financed highway construction, and lending practices promulgated by New Deal agencies are often invoked as explanatory factors in the rise of segregation. Similarly, at the local level, zoning laws and ordinances are often thought to have helped create racial disparities in access to housing. In this paper, we ask: how and why did residential segregation in American cities come to enjoy state sponsorship? We present a simple model that suggests two processes drove demand for state-sponsored segregation: increased housing demand among African Americans; and a reduced ability among white communities to enforce informal norms through private vigilante activity. Formal econometric tests are consistent with these predictions.