Trust, Regulation and Market Failures
AbstractGovernment regulation of firms is associated with more negative externalities and unofficial activity across countries. I argue that this correlation mainly reflects causality going from concerns about market failures to demand for government intervention. Using trust in others as a proxy for such concerns, I show that differences in trust explain a great deal of variation in entry regulations. Then, controlling for trust in the regression of market failures on regulation, the latter is no longer associated with worse economic outcomes. The same result is confirmed when I exploit country population as an alternative source of variation in regulation. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics and Statistics.
Volume (Year): 94 (2012)
Issue (Month): 3 (August)
Contact details of provider:
Web page: http://mitpress.mit.edu/journals/
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Z10 - Other Special Topics - - Cultural Economics - - - General
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Alberto Alesina & Paola Giuliano, 2013. "Culture and Institutions," NBER Working Papers 19750, National Bureau of Economic Research, Inc.
- Matthias Bürker & G. Alfredo Minerva, 2012.
"Civic Capital and the Size Distribution of Plants: Short-Run Dynamics and Long-Run Equilibrium,"
2012.81, Fondazione Eni Enrico Mattei.
- Mathias Burker & G. Alfredo Minerva, 2012. "Civic capital and the size distribution of plants: Short-run dynamics and long-run equilibrium," Working Papers 123, University of California, Davis, Department of Economics.
- Pauline Grosjean & Frantisek Ricka & Claudia Senik, 2011.
"Learning, political attitudes and the crisis in transition countries,"
140, European Bank for Reconstruction and Development, Office of the Chief Economist.
- Pauline Grosjean & Frantisek Ricka & Claudia Senik, 2011. "Learning, Political Attitudes and the Crisis in Transition Countries," Discussion Papers 2011-16, School of Economics, The University of New South Wales.
- Antonio Accetturo & Guido de Blasio & Lorenzo Ricci, 2014.
"A tale of an unwanted outcome: transfers and local endowments of trust and cooperation,"
Temi di discussione (Economic working papers)
959, Bank of Italy, Economic Research and International Relations Area.
- Accetturo, Antonio & de Blasio, Guido & Ricci, Lorenzo, 2014. "A tale of an unwanted outcome: Transfers and local endowments of trust and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 74-89.
- Marcus Dejardin & Helene Laurent, 2014. "Greasing the wheels of entrepreneurship? A complement according to entrepreneurial motives," Working Papers 1402, University of Namur, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If references are entirely missing, you can add them using this form.