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How corruption in government affects public welfare: A review of theory

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  • Lambsdorff, Johann

Abstract

The objectives of government are pivotal to understanding the diverse negative effects of corruption on public welfare. Corruption renders governments unable or unwilling to maximize welfare. In the first case, it distorts agents' decisions and limits the contractual space available to agents and the government, acting as a benevolent principal. In the second case, a corrupt principal creates allocative inefficiencies, cripples its credible commitment to effective policies, and opens the door to opportunism.

Suggested Citation

  • Lambsdorff, Johann, 2001. "How corruption in government affects public welfare: A review of theory," University of Göttingen Working Papers in Economics 9, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:9
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    Cited by:

    1. Németh, Erzsébet & Martus, Bettina & Vargha, Bálint Tamás, 2018. "Integrity Risks and Controls of Public Services," Public Finance Quarterly, Corvinus University of Budapest, vol. 63(2), pages 155-175.
    2. Khan, Anupriya & Krishnan, Satish, 2019. "Conceptualizing the impact of corruption in national institutions and national stakeholder service systems on e-government maturity," International Journal of Information Management, Elsevier, vol. 46(C), pages 23-36.
    3. Adam, Ibrahim Osman, 2020. "Examining E-Government development effects on corruption in Africa: The mediating effects of ICT development and institutional quality," Technology in Society, Elsevier, vol. 61(C).
    4. PREDA Ionut - Cristian, 2023. "Corruption Impact On Healthcare Systems During The Covid-19 Pandemic," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 75(1), pages 50-65, April.

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    More about this item

    Keywords

    Corruption; welfare; principal-agent-theory; rent-seeking; x-inefficiency; kleptocracy; opportunism;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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