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The Costs of Corruption in the Italian Solid Waste Industry

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  • Graziano Abrate

    ()
    (Department of Business Management and Environment, University of Eastern Piedmont)

  • Fabrizio Erbetta

    ()
    (Department of Business Management and Environment, University of Eastern Piedmont)

  • Giovanni Fraquelli

    ()
    (Department of Business Management and Environment, University of Eastern Piedmont)

  • Davide Vannoni

    ()
    (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)

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://eco83.econ.unito.it/RePEc/wp/m4.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino in its series Working papers with number 004.

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Length: 27 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:tur:wpapnw:004

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

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  1. Pierre-Guillaume Méon & Laurent Weill, 2008. "Is Corruption an Efficient Grease ?," Working Papers of LaRGE Research Center 2008-06, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
  2. 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.
  3. 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.
  4. 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.
  5. Antonio Estache & Martin A. Rossi, 2009. "Regulatory Agencies: Impact on Firm Performance and Social Welfare," Working Papers ECARES 2009_010, ULB -- Universite Libre de Bruxelles.
  6. Estache, Antonio & Goicoechea, Ana & Trujillo, Lourdes, 2009. "Utilities reforms and corruption in developing countries," Utilities Policy, Elsevier, vol. 17(2), pages 191-202, June.
  7. 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.
  8. 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.
  9. Wren-Lewis, Liam, 2013. "Do infrastructure reforms reduce the effect of corruption ? theory and evidence from Latin America and the Caribbean," Policy Research Working Paper Series 6559, The World Bank.
  10. Shang-Jin Wei, 1997. "How Taxing is Corruption on International Investors?," NBER Working Papers 6030, National Bureau of Economic Research, Inc.
  11. 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.
  12. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  13. 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.
  14. 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.
  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. Barbara Antonioli & Massimo Filippini, 2002. "Optimal Size in the Waste Collection Sector," Review of Industrial Organization, Springer, vol. 20(3), pages 239-252, May.
  17. 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.
  18. Johann Graf Lambsdorff, 2003. "How Corruption Affects Productivity," Kyklos, Wiley Blackwell, vol. 56(4), pages 457-474, November.
  19. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
  20. 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.
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