Political distortions of market competition and electoral competition in Sweden: An integrated analysis using micro-data on local politicians, firms, and procurement

This project seeks to provide new knowledge about the potential distortionary effects of personal connections between firms and local politicians—a major topic in international research, which is yet under-researched in Sweden.

Combining perspectives from economics and political science, we propose an integrated analytical approach that considers the possibility that a reciprocal exchange of favors between politicians and firms may impact both market competition and electoral competition in parallel. We address two primary research questions:1.

Do (direct or family-based) personal connections to local politicians make firms perform better and/or win more procurement contracts?2.

Are firms with such connections to local governing parties more likely than others to alter corporate decisions in ways that may give these parties an advantage in a competitive election (e.g., by increasing hiring or postponing plant closures)?We answer these questions by analyzing a new combination of micro-data on local politicians, their family ties and firm connections, firm outcomes, and procurement in Swedish municipalities and regions.

Our team consists of two political scientists specializing in political economy, local politics, and micro-data research, working part-time (40–50%) for four years.In light of recent reports of growing corruption risks in Sweden, we hope to generate new insights with relevance for how to regulate procurement as well as firm–politician connections more broadly.