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Trust, perceptions of corruption, and demand for regulation: Evidence from post-socialist countries

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  • Dimitrova-Grajzl, Valentina
  • Grajzl, Peter
  • Guse, A. Joseph

Abstract

While the tradeoff between market failure and government failure has been explored both theoretically and in practical policy design, the question of whether this trade-off appears in the calculus of citizens’ demands for government regulation remains underexplored. We first clarify the channels through which concerns for market failure, as proxied by trust in market participants, and concerns for government failure, as proxied by perceptions of corruption, jointly affect individuals’ demand for government regulation. We then investigate these effects empirically, using data from post-socialist countries. Our analysis confirms the previously established result that trust has a negative effect on demand for regulation. Perceived corruption, however, affects demand for regulation primarily via a negative interaction effect with trust. Our findings suggest that, in post-socialist countries, both concerns for market failure and concerns for government failure are indeed in citizens’ minds and that concerns about the anticipated ‘grabbing-hand’ effect from government involvement are particularly salient.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 41 (2012)
Issue (Month): 3 ()
Pages: 292-303

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Handle: RePEc:eee:soceco:v:41:y:2012:i:3:p:292-303

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Demand for regulation; Trust; Perceptions of corruption; Post-socialist countries;

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Cited by:
  1. Shaw, Philip & Vásquez, William F. & LeClair, Mark, 2013. "Intelligence and bribing behavior in a one-shot game," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 91-96.
  2. Pitlik, Hans & Kouba, Ludek, 2014. "Does social distrust always lead to a stronger support for government intervention?," Ratio Working Papers 227, The Ratio Institute.

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