Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories

Ladislava Grochova () and Tomáš Otáhal ()
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Ladislava Grochova: Department of Economics, FBE MENDELU in Brno

ACTA VSFS, 2012, vol. 6, issue 2, 136-154

Abstract: Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith, 2001, chap. 5). The modern Public Choice proponents argue that corruption and lobbying might influence the efficiency of the rule of law. While Chicago Public Choice scholars model how legal lobbying, which is corruption in V irginia Public Choice perspective, improves efficiency of the rule of law and thus the overall economic efficiency, the Virginia Public Choice models explain how corruption reduces efficiency of the rule of law and thus the overall economic efficiency. In this short paper, we present a brief survey distinguishing between arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption influences economic efficiency. We argue that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic rent-seeking.

Keywords: bureaucracy; corruption; economic efficiency; Chicago Public Choice; lobbying; Virginia Public Choice; rent-seeking; rule of law (search for similar items in EconPapers)
JEL-codes: D74 K42 P3 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Working Paper: Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories (2012)
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