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Impact of Corruption on Utility Prices: A Theoretical and Empirical Analysis for the Electricity Markets

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  • Mustafa Kadir DOĞAN
  • Funda ALTUN

Abstract

This study investigates the influence of corruption on utility prices. We develop a gametheoretical model to explore the interactions between the government, an interest group formed by firms, and consumers in determining utility prices. The model suggests that an increase in corruption correlates with a rise in utility prices, a relationship confirmed through empirical analysis of electricity sectors in 21 OECD countries from 1995 to 2015. Additionally, we explore the effects of regulatory reforms on electricity prices, revealing mixed outcomes. The findings emphasise the importance of anti-corruption efforts in shaping fair utility prices.

Suggested Citation

  • Mustafa Kadir DOĞAN & Funda ALTUN, 2024. "Impact of Corruption on Utility Prices: A Theoretical and Empirical Analysis for the Electricity Markets," Sosyoekonomi Journal, Sosyoekonomi Society, issue 32(60).
    • Handle: RePEc:sos:sosjrn:240204
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    More about this item

    Keywords

    Regulatory Capture; Corruption; Political Agency; Utility Prices; Electricity Prices; Regulatory Reforms.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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