Laws for Sale: Evidence from Russia

        How does regulatory capture affect growth? We construct measures of the political power of
firms and regional regulatory capture using micro-level data on the preferential treatment of firms
through regional laws and regulations in Russia during the period 1992-2000. Using these measures,
we find that: 1) politically powerful firms perform better on average; 2) a high level of regulatory
capture hurts the performance of firms that have no political connections and boosts the
performance of politically connected firms; 3) capture adversely affects small business growth and
the tax capacity of the state; 4) there is no evidence that capture affects aggregate growth.