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Legal Standards, Enforcement and Corruption

  • Giovanni Immordino

    (University of Salerno and CSEF)

  • Marco Pagano

    (University of Naples "Federico II", CSEF, EIEF and CEPR)

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.

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Paper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 0914.

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Length: 45 pages
Date of creation: 2009
Date of revision: Oct 2009
Handle: RePEc:eie:wpaper:0914
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