Corruption and regulatory burden
AbstractIt is known that government has discretionary power in providing public goods and regulating the economy. Corrupt bureaucracy with discretionary power creates and extracts rents by manipulating with the public good supply and regulations: i) by attaching excessive red tape to the public good they are providing; ii) or by making the regulations di±cult for the private agents to comply with. The former type of corruption results in less public input being provided at higher cost to the private agents. The latter increases non-compliance, which then breeds bribery. Consequently, the overall public sector burden is higher in the environment with corrupt bureaucracy. We show this outcome using a simple theoretical model, and then confront it with empirical evidence.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2081.
Date of creation: 05 May 2008
Date of revision:
corruption; regulatory burden;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-10 (All new papers)
- NEP-CDM-2008-05-10 (Collective Decision-Making)
- NEP-PBE-2008-05-10 (Public Economics)
- NEP-REG-2008-05-10 (Regulation)
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