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Legal Standards, Enforcement and Corruption

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  • Immordino, Giovanni
  • Pagano, Marco

Abstract

Stricter laws require more incisive and costlier enforcement. Since enforcement activity depends both on available tax revenue and the honesty of officials, the optimal legal standard of a benevolent government is increasing in per-capita income and decreasing in officials' corruption. In contrast to the "tollbooth view" of regulation, the standard chosen by a self-interested government is a non-monotonic function of officials' corruption, and can be either lower or higher than that chosen by a benevolent regulator. International evidence on environmental regulation show that standards correlate positively with per-capita income, and negatively with corruption, consistently with the model's predictions for benevolent governments

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7071.

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Date of creation: Dec 2008
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Handle: RePEc:cpr:ceprdp:7071

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Keywords: corruption; enforcement; legal standards; tollbooth view;

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Citations

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Cited by:
  1. Facchini, Giovanni & Testa, Cecilia, 2011. "The rhetoric of closed borders: quotas, lax enforcement and illegal migration," CEPR Discussion Papers 8245, C.E.P.R. Discussion Papers.
  2. Giovanni Immordino & Marco Pagano & Michele Polo, 2009. "Incentives to Innovate and Social Harm:Laissez-Faire, Authorization or Penalties?," Working Papers 349, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  3. Giovanni Immordino & Marco Pagano & Michele Polo, 2006. "Norm Flexibility and Private Initiative," Working Papers 314, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Berglof, Erik & Claessens, Stijn, 2004. "Enforcement and Corporate Governance," Policy Research Working Paper Series 3409, The World Bank.
  5. Stephen P Millard & Matthew Willison, 2004. "The welfare benefits of stable and efficient payment systems," Money Macro and Finance (MMF) Research Group Conference 2004 36, Money Macro and Finance Research Group.
  6. Hui Tong & Shang-Jin Wei, 2011. "Does Trade Globalization Induce or Inhibit Corporate Transparency? Unbundling the Growth Potential and Product Market Competition Channels," NBER Working Papers 17631, National Bureau of Economic Research, Inc.
  7. Harilaos Mertzanis, 2011. "The effectiveness of corporate governance policy in Greece," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 19(3), pages 222-243, July.
  8. Marco Pagano & Giovanni Immordino, 2007. "Optimal Regulation of Auditing," CESifo Working Paper Series 1980, CESifo Group Munich.

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