IDEAS home Printed from https://ideas.repec.org/a/prf/journl/v6y2012i2p136-154.html
   My bibliography  Save this article

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

Author

Listed:
  • Ladislava Grochova

    (Department of Economics, FBE MENDELU in Brno)

  • Tomas Otahal

    (Department of Economics, FBE MENDELU in Brno)

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.

Suggested Citation

  • Ladislava Grochova & Tomas Otahal, 2012. "Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories," ACTA VSFS, University of Finance and Administration, vol. 6(2), pages 136-154.
    • Handle: RePEc:prf:journl:v:6:y:2012:i:2:p:136-154
    as

    Download full text from publisher

    File URL: https://www.vsfs.cz/periodika/acta-2012-2-03.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Banfield, Edward C, 1975. "Corruption as a Feature of Governmental Organization," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 587-605, December.
    2. Mancur Olson, 1996. "Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 3-24, Spring.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Tunstall, Rebecca & Lupton, Ruth & Power, Anne & Richardson, Liz, 2011. "Building the Big Society," LSE Research Online Documents on Economics 43807, London School of Economics and Political Science, LSE Library.
    5. Ruth Lupton & Anne Power & Liz Richardson & Rebecca Tunstall, 2011. "Building the Big Society," CASE Reports casereport67, Centre for Analysis of Social Exclusion, LSE.
    6. Olson, Mancur, 1993. "Dictatorship, Democracy, and Development," American Political Science Review, Cambridge University Press, vol. 87(3), pages 567-576, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mariia Shkolnykova & Lasse Steffens & Jan Wedemeier, 2024. "Systems of innovation: Path of economic transition and differences in institutions in central and Eastern Europe?," Growth and Change, Wiley Blackwell, vol. 55(1), March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adam Gersl & Jakub Seidler, 2012. "Excessive Credit Growth and Countercyclical Capital Buffers in Basel III: An Empirical Evidence from Central and East European Countries," ACTA VSFS, University of Finance and Administration, vol. 6(2), pages 91-107.
    2. Noman Shaheer & Jingtao Yi & Sali Li & Liang Chen, 2019. "State-Owned Enterprises as Bribe Payers: The Role of Institutional Environment," Journal of Business Ethics, Springer, vol. 159(1), pages 221-238, September.
    3. Vaclav Zdarek, 2012. "Testing the Relative PPP Hypothesis in CEE States – Does the ‘PPP Puzzle’ Still Keep up?," ACTA VSFS, University of Finance and Administration, vol. 6(2), pages 108-135.
    4. Ladislava Grochova & Tomas Otahal, 2011. "Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics," MENDELU Working Papers in Business and Economics 2011-13, Mendel University in Brno, Faculty of Business and Economics.
    5. Irena Jindrichovska, 2012. "Generating Social Innovations: Some Recent Experience from Abroad," ACTA VSFS, University of Finance and Administration, vol. 6(2), pages 155-168.
    6. Tao, Qizhi & Li, Haoyu & Wu, Qun & Zhang, Ting & Zhu, Yingjun, 2019. "The dark side of board network centrality: Evidence from merger performance," Journal of Business Research, Elsevier, vol. 104(C), pages 215-232.
    7. Díaz Serrano, Lluís & Sackey, Frank G., 2016. "Do political regime transitions in Africa Matter for Citizens’ Health Status," Working Papers 2072/267086, Universitat Rovira i Virgili, Department of Economics.
    8. Thorsten Beck & Ross Levine, 2008. "Legal Institutions and Financial Development," Springer Books, in: Claude Ménard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 11, pages 251-278, Springer.
    9. Hilton L. Root & Karen May, 2006. "Judicial Systems and Authoritarian Transitions," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1301-1321.
    10. Duarte N. Leite & Sandra T. Silva & Oscar Afonso, 2014. "Institutions, Economics And The Development Quest," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 491-515, July.
    11. Peter T. Leeson & Douglas Bruce Rogers, 2012. "Organizing Crime," Supreme Court Economic Review, University of Chicago Press, vol. 20(1), pages 89-123.
    12. Eggertsson, Thrainn, 1997. "The old theory of economic policy and the new institutionalism," World Development, Elsevier, vol. 25(8), pages 1187-1203, August.
    13. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    14. Vining, Aidan R. & Richards, John, 2016. "Indigenous economic development in Canada: Confronting principal-agent and principal–principal problems to reduce resource rent dissipation," Resources Policy, Elsevier, vol. 49(C), pages 358-367.
    15. Hugh-Jones, David, 2010. "Interstate Competition and Political Stability," CAGE Online Working Paper Series 26, Competitive Advantage in the Global Economy (CAGE).
    16. How, Janice & Verhoeven, Peter & Abdul Wahab, Effiezal Aswadi, 2014. "Institutional investors, political connections and analyst following in Malaysia," Economic Modelling, Elsevier, vol. 43(C), pages 158-167.
    17. Diaz-Serrano, Luis & Sackey, Frank Gyimah, 2016. "Do Leaders' Characteristics and Regime Transitions in Africa Matter for Citizens' Health Status?," IZA Discussion Papers 10338, Institute of Labor Economics (IZA).
    18. Cuervo-Cazurra, Alvaro, 2016. "Corruption in international business," Journal of World Business, Elsevier, vol. 51(1), pages 35-49.
    19. Ronald Wintrobe, 2012. "Autocracy and coups d’etat," Public Choice, Springer, vol. 152(1), pages 115-130, July.
    20. Francesco Decarolis & Raymond Fisman & Paolo Pinotti & Silvia Vannutelli, 2019. "Rules, Discretion, and Corruption in Procurement: Evidence from Italian Government Contracting," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-344, Boston University - Department of Economics.

    More about this item

    Keywords

    bureaucracy; corruption; economic efficiency; Chicago Public Choice; lobbying; Virginia Public Choice; rent-seeking; rule of law;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prf:journl:v:6:y:2012:i:2:p:136-154. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Magdalena Šebková (email available below). General contact details of provider: https://edirc.repec.org/data/vsfspcz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.