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Yardstick Competition, Corruption, and Electoral Incentives

Author

Listed:
  • Ngo Van Long
  • Bodhisattva Sengupta

Abstract

This paper investigates the relationship between electoral incentives, institutions and corruption. We assume that voters use a yardstick criterion. The incumbent provides a public good and extracts rent, which are financed by imposing a distortionary tax. We demonstrate the possibility that yardstick competition itself fails to restrict rent seeking. We complement the static setting with a dynamic scenario where each incumbent politician faces an election after a finite, fixed term. Under relative performance evaluation, dynamic incentives impose more restriction on rent appropriation in comparison to the static case.

Suggested Citation

  • Ngo Van Long & Bodhisattva Sengupta, 2008. "Yardstick Competition, Corruption, and Electoral Incentives," CESifo Working Paper Series 2345, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2345
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp2345.pdf
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    References listed on IDEAS

    as
    1. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    2. Paul Belleflamme & Jean Hindriks, 2005. "Yardstick competition and political agency problems," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 24(1), pages 155-169, September.
    3. Dalgic, Engin & Long, Ngo Van, 2006. "Corrupt local governments as resource farmers: The helping hand and the grabbing hand," European Journal of Political Economy, Elsevier, vol. 22(1), pages 115-138, March.
    4. Kenneth Rogoff & Anne Sibert, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Oxford University Press, vol. 55(1), pages 1-16.
    5. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    6. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    yardstick competition; rent-seeking; public good; electoral incentives;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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