The Rise of New Corruption: British Mps During the Railway Mania of 1845

53 Pages Posted: 4 Aug 2017

See all articles by Rui Esteves

Rui Esteves

Graduate Institute of International and Development Studies (IHEID)

Gabriel Geisler Mesevage

affiliation not provided to SSRN

Date Written: July 2017

Abstract

In the 1840s, speculation in railway shares in the UK prompted the creation of hundreds of new railway companies. Each company needed to petition Parliament for the approval of new railway routes. In this paper, we investigate whether parliamentary regulation of the new railway network was distorted by politicians' vested interests. Drawing on methods from peer-effects analysis, we identify situations where MPs could have traded votes with specific colleagues in order to get their preferred projects approved (logrolling). We confirm that logrolling was both prevalent and significant. Our estimates suggest that at least a quarter of approved lines received their bills because of logrolling. Companies approved through logrolling also underperformed in the stock market during the railway bubble and after its final crash in 1847.

Keywords: networks, railways, rent-seeking, voting

JEL Classification: D72, N44, N73

Suggested Citation

Esteves, Rui and Geisler Mesevage, Gabriel, The Rise of New Corruption: British Mps During the Railway Mania of 1845 (July 2017). CEPR Discussion Paper No. DP12182, Available at SSRN: https://ssrn.com/abstract=3011420

Rui Esteves (Contact Author)

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

Gabriel Geisler Mesevage

affiliation not provided to SSRN

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