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The Costs of Corruption in the Italian Solid Waste Industry

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  • Graziano Abrate
  • Fabrizio Erbetta
  • Giovanni Fraquelli
  • Davide Vannoni

Abstract

The paper investigates the link between corruption and efficiency by using a rich micro-level dataset concerning solid waste collection activities in 529 Italian municipalities observed over the years 2004-2006. In order to test the impact of corruption on cost efficiency we estimate a stochastic latent class frontier approach, which accounts for technological heterogeneity across units. The results of our estimates show that corruption significantly increases inefficiency, a finding which is robust to the inclusion of alternative local corruption indicators and of other control variables such as geographical, demographic and political factors. Finally, we find that the impact of corruption tends to be greater in the southern regions of the country and for those municipalities which are less involved in recycling activities.

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File URL: http://www.carloalberto.org/assets/working-papers/no.275.pdf
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Bibliographic Info

Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 275.

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Length: 28 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:cca:wpaper:275

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Keywords: corruption; cost inefficiency; latent class stochastic frontier; solid waste.;

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References

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  1. Salinas-Jimenez, M del Mar & Salinas-Jimenez, Javier, 2007. "Corruption, efficiency and productivity in OECD countries," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 903-915.
  2. Alessio D'Amato & Massimiliano Mazzanti & Francesco Nicolli, 2011. "Waste Sustainability, Environmental Management and Mafia: Analysing Geographical and Economic Dimensions," CEIS Research Paper 213, Tor Vergata University, CEIS, revised 24 Oct 2011.
  3. Pierre-Guillaume Méon & Laurent Weill, . "Is corruption an efficient grease?," ULB Institutional Repository 2013/8408, ULB -- Universite Libre de Bruxelles.
  4. Dal Bo, Ernesto & Rossi, Martin A., 2007. "Corruption and inefficiency: Theory and evidence from electric utilities," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 939-962, June.
  5. Estache, Antonio & Goicoechea, Ana & Trujillo, Lourdes, 2009. "Utilities reforms and corruption in developing countries," Utilities Policy, Elsevier, vol. 17(2), pages 191-202, June.
  6. Estache, Antonio & Rossi, Martin A., 2008. "Regulatory agencies : impact on firm performance and social welfare," Policy Research Working Paper Series 4509, The World Bank.
  7. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  8. Liam Wren-Lewis, 2011. "Do infrastructure reforms reduce the effect of corruption? Theory and evidence from Latin America and the Caribbean," Economics Series Working Papers 576, University of Oxford, Department of Economics.
  9. Graziano Abrate & Fabrizio Erbetta & Giovanni Fraquelli, 2011. "Public utility planning and cost efficiency in a decentralized regulation context: the case of the Italian integrated water service," Journal of Productivity Analysis, Springer, vol. 35(3), pages 227-242, June.
  10. Olson, Mancur, Jr & Sarna, Naveen & Swamy, Anand V, 2000. " Governance and Growth: A Simple Hypothesis Explaining Cross-Country Differences in Productivity Growth," Public Choice, Springer, vol. 102(3-4), pages 341-64, March.
  11. Graziano Abrate & Fabrizio Erbetta & Giovanni Fraquelli & Davide Vannoni, 2011. "The Costs of Disposal and Recycling. An Application to Italian Municipal Solid Waste Services," Carlo Alberto Notebooks 232, Collegio Carlo Alberto.
  12. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  13. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
  14. Johann Graf Lambsdorff, 2003. "How Corruption Affects Productivity," Kyklos, Wiley Blackwell, vol. 56(4), pages 457-474, November.
  15. Miriam A. Golden & Lucio Picci, 2005. "Proposal For A New Measure Of Corruption, Illustrated With Italian Data," Economics and Politics, Wiley Blackwell, vol. 17, pages 37-75, 03.
  16. George Emm Halkos & Nickolaos Tzeremes, 2010. "Corruption and Economic Efficiency: Panel Data Evidence," Global Economic Review, Taylor & Francis Journals, vol. 39(4), pages 441-454.
  17. Shang-Jin Wei, 1997. "How Taxing is Corruption on International Investors?," NBER Working Papers 6030, National Bureau of Economic Research, Inc.
  18. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
  19. Barbara Antonioli & Massimo Filippini, 2002. "Optimal Size in the Waste Collection Sector," Review of Industrial Organization, Springer, vol. 20(3), pages 239-252, May.
  20. Luis Orea & Subal C. Kumbhakar, 2004. "Efficiency measurement using a latent class stochastic frontier model," Empirical Economics, Springer, vol. 29(1), pages 169-183, January.
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