Political connection and allocation of capital in the corporate sector in Mauritius. A game approach (theoretical relationship)

This Paper develops a unique Game Theoretical Analysis to test the existence of political connections of firms in Mauritius. A decision tree analysis, with Nash Equilibrium is solved to make decisions about corporate political behaviour. From the point of view of game theory, by building static and dynamic game models, the authors investigate the game relationship of political associations between government and firms which affect the efficient allocation of capital in Mauritius. It additionally uncovers that political associations between the government and firms that determine the allocation of finance. This paper illustrates political connections in the allocation of funds and thus contributes to the theoretical literature in the field for the case of a small island developing state.