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Corruption, Accountability and Efficiency. An Application to Municipal Solid Waste Services

  • Graziano Abrate

    ()

    (Department of Business Management and Environment, University of Eastern Piedmont)

  • Federico Boffa

    ()

    (Department of Law and Economics, University of Macerata)

  • Fabrizio Erbetta

    ()

    (Department of Business Management and Environment, University of Eastern Piedmont)

  • Davide Vannoni

    ()

    (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)

This paper explores the link between accountability, corruption and efficiency in the context of a career concern model where politically connected local monopolies are in charge of the provision of a local public service. We find that both corruption and a low degree of accountability induce managers to reduce effort levels, thereby contributing to drive down efficiency. Our predictions are tested using data on solid waste management services provided by a large sample of Italian municipalities. The results of the estimation of a stochastic cost frontier model provide robust evidence that high corruption levels and low degrees of accountability substantially increase cost inefficiency. Finally, we show that the negative impact of corruption is weaker for municipalities ruled by left-wing parties, while the positive impact of accountability is stronger if the refuse collection service is managed by limited liability companies.

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File URL: http://eco83.econ.unito.it/RePEc/wp/m22.pdf
File Function: First version, 2013
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Paper provided by Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino in its series Working papers with number 022.

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Length: 34 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:tur:wpapnw:022
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  14. Anna Menozzi & María Gutierrez Urtiaga & Davide Vannoni, 2010. "Board Composition, Political Connections and Performance in State-Owned Enterprises," Carlo Alberto Notebooks 185, Collegio Carlo Alberto.
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