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Trust, perceptions of corruption, and demand for regulation: Evidence from post-socialist countries


  • Dimitrova-Grajzl, Valentina
  • Grajzl, Peter
  • Guse, A. Joseph


While the tradeoff between market failure and government failure has been explored both theoretically and in practical policy design, the question of whether this trade-off appears in the calculus of citizens’ demands for government regulation remains underexplored. We first clarify the channels through which concerns for market failure, as proxied by trust in market participants, and concerns for government failure, as proxied by perceptions of corruption, jointly affect individuals’ demand for government regulation. We then investigate these effects empirically, using data from post-socialist countries. Our analysis confirms the previously established result that trust has a negative effect on demand for regulation. Perceived corruption, however, affects demand for regulation primarily via a negative interaction effect with trust. Our findings suggest that, in post-socialist countries, both concerns for market failure and concerns for government failure are indeed in citizens’ minds and that concerns about the anticipated ‘grabbing-hand’ effect from government involvement are particularly salient.

Suggested Citation

  • Dimitrova-Grajzl, Valentina & Grajzl, Peter & Guse, A. Joseph, 2012. "Trust, perceptions of corruption, and demand for regulation: Evidence from post-socialist countries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(3), pages 292-303.
  • Handle: RePEc:eee:soceco:v:41:y:2012:i:3:p:292-303 DOI: 10.1016/j.socec.2012.01.005

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    References listed on IDEAS

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    1. repec:wsi:jdexxx:v:22:y:2017:i:03:n:s1084946717500182 is not listed on IDEAS
    2. Nikolaev, Boris & Boudreaux, Christopher & Salahodjaev, Rauf, 2017. "Are individualistic societies less equal? Evidence from the parasite stress theory of values," Journal of Economic Behavior & Organization, Elsevier, vol. 138(C), pages 30-49.
    3. Hans Pitlik & Ludek Kouba, 2015. "Does social distrust always lead to a stronger support for government intervention?," Public Choice, Springer, vol. 163(3), pages 355-377, June.
    4. Polyachenko Sergiy, 2016. "Do changes in social and economic characteristics affect attitude towards price control?," EERC Working Paper Series 16/05e, EERC Research Network, Russia and CIS.
    5. repec:cup:jinsec:v:13:y:2017:i:03:p:575-598_00 is not listed on IDEAS
    6. Pitlik, Hans & Rode, Martin, 2017. "Individualistic values, institutional trust, and interventionist attitudes," Journal of Institutional Economics, Cambridge University Press, vol. 13(03), pages 575-598, September.
    7. Bosco, Bruno, 2016. "Old and new factors affecting corruption in Europe: Evidence from panel data," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 66-85.
    8. Traikova, Diana & Manolova, Tatiana & Möllers, Judith & Buchenrieder, Gertrud, 2014. "Bribing culture and rural start-up plans in transition: evidence from Bulgaria," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182794, European Association of Agricultural Economists.
    9. Shaw, Philip & Vásquez, William F. & LeClair, Mark, 2013. "Intelligence and bribing behavior in a one-shot game," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 91-96.
    10. John V. Nye & Maksym Bryukhanov & Sergiy Polyachenko, 2016. "Does Higher Education Contribute to a Change in Attitudes to Government Price Control in Russia?," HSE Working papers WP BRP 146/EC/2016, National Research University Higher School of Economics.

    More about this item


    Demand for regulation; Trust; Perceptions of corruption; Post-socialist countries;

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification


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