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Corruption and Competition

Franklin Allen, Jun Qian and Lin Shen

No 13218, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: An interesting aspect of corruption is that its damaging effects on economic performance differ significantly across countries. In this paper, we show that if a central government collects sufficient taxes, it can curtail corruption by paying for performance of local government officials. An alternative way to reduce corruption is to introduce competition among local government officials. Difference in axing ability and the magnitude of competition among government officials can help explain the heterogenous effects of corruption across countries.

Keywords: Competition; Corruption; institutions; taxes; user fee (search for similar items in EconPapers)
JEL-codes: H0 P5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pol
Date: 2018-10
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