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Legal Standards, Enforcement and Corruption

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Author Info

  • Giovanni Immordino

    (University of Salerno and CSEF)

  • Marco Pagano

    (University of Naples "Federico II", CSEF, EIEF and CEPR)

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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File URL: http://www.eief.it/files/2012/09/wp-14-legal-standards-enforcement-and-corruption.pdf
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Bibliographic Info

Paper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 0914.

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Length: 45 pages
Date of creation: 2009
Date of revision: Oct 2009
Handle: RePEc:eie:wpaper:0914

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References

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Cited by:
  1. Marco Pagano & Giovanni Immordino, 2007. "Optimal Regulation of Auditing," CESifo Working Paper Series 1980, CESifo Group Munich.
  2. 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.
  3. Berglof, Erik & Claessens, Stijn, 2004. "Enforcement and Corporate Governance," Policy Research Working Paper Series 3409, The World Bank.
  4. Immordino, Giovanni & Pagano, Marco & Polo, Michele, 2011. "Incentives to innovate and social harm: Laissez-faire, authorization or penalties?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 864-876, August.
  5. Giovanni Facchini & Cecilia Testa, 2010. "The rhetoric of closed borders: quotas, lax enforcement and illegal migration," Norface Discussion Paper Series 2010001, Norface Research Programme on Migration, Department of Economics, University College London.
  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. Stephen Millard & Matthew Willison, 2006. "The welfare benefits of stable and efficient payment systems," Bank of England working papers 301, Bank of England.
  8. Giovanni Immordino & Marco Pagano & Michele Polo, 2006. "Norm Flexibility and Private Initiative," Working Papers 314, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

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