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Legal Standards, Enforcement and Corruption

Author

Listed:
  • 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.

Suggested Citation

  • Giovanni Immordino & Marco Pagano, 2009. "Legal Standards, Enforcement and Corruption," EIEF Working Papers Series 0914, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2009.
  • Handle: RePEc:eie:wpaper:0914
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Giovanni Immordino & Marco Pagano & Michele Polo, 2006. "Norm Flexibility and Private Initiative," CSEF Working Papers 163, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Nov 2006.
    4. Berglof, Erik & Claessens, Stijn, 2004. "Enforcement and Corporate Governance," Policy Research Working Paper Series 3409, The World Bank.
    5. Tong, Hui & Wei, Shang-Jin, 2014. "Does trade globalization induce or inhibit corporate transparency? Unbundling the growth potential and product market competition channels," Journal of International Economics, Elsevier, vol. 94(2), pages 358-370.
    6. Stephen P Millard & Matthew Willison, 2004. "The welfare benefits of stable and efficient payment systems," Money Macro and Finance (MMF) Research Group Conference 2004 36, Money Macro and Finance Research Group.
    7. 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.
    8. Marco Pagano & Giovanni Immordino, 2007. "Optimal Regulation of Auditing," CESifo Economic Studies, CESifo, vol. 53(3), pages 363-388, September.
    9. Grajzl, Peter & Baniak, Andrzej, 2009. "Industry self-regulation, subversion of public institutions, and social control of torts," International Review of Law and Economics, Elsevier, vol. 29(4), pages 360-374, December.

    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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