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Can corruption foster regulatory compliance?

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  • Fabio Méndez

Abstract

The legal and economic literatures overwhelmingly support the notion that regulatory compliance is always less in the presence of corruption. This paper departs from those literatures and shows that, whenever public officials are paid fixed wages, an increase in corruption may actually foster compliance. The conditions that make this possible are laid down in a theoretical model. Empirical evidence that corroborates the theoretical findings is provided using firm-level data for 26 transition economies. Copyright Springer Science+Business Media, LLC 2014

Suggested Citation

  • Fabio Méndez, 2014. "Can corruption foster regulatory compliance?," Public Choice, Springer, vol. 158(1), pages 189-207, January.
    • Handle: RePEc:kap:pubcho:v:158:y:2014:i:1:p:189-207
    DOI: 10.1007/s11127-012-9958-4
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    Cited by:

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    2. Artjoms Ivlevs & Timothy Hinks, 2015. "Global economic crisis and corruption," Public Choice, Springer, vol. 162(3), pages 425-445, March.
    3. Samuel Andrew & Schwartz Jeremy, 2019. "Product Market Competition’s Effect on Earnings Management When Audit Quality Is Endogenous: Theory and Evidence," Review of Law & Economics, De Gruyter, vol. 15(3), pages 1-35, November.

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    Keywords

    Corruption; Regulatory compliance;

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