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Legal Standards, Enforcement and Corruption

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 percapita income, and negatively with corruption, consistently with the model’s predictions for benevolent governments.

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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 98.

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Date of creation: 01 Jun 2003
Date of revision: 01 Oct 2009
Publication status: Published in the Journal of the European Economic Association, Vol. 8, No. 5, September 2010.
Handle: RePEc:sef:csefwp:98
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