TY - JOUR
T1 - CORRUPTION, PRODUCT MARKET COMPETITION, AND INSTITUTIONAL QUALITY
T2 - EMPIRICAL EVIDENCE FROM THE U.S. STATES
AU - Bologna, Jamie
N1 - Publisher Copyright:
© 2016 Western Economic Association International
PY - 2017/1/1
Y1 - 2017/1/1
N2 - This article argues that the effect of corruption on competition is dependent on the institutional environment. When institutions are relatively efficient, observed corruption is likely to be associated with relatively less competition. Conversely, in areas with low quality institutions (e.g., excessively burdensome regulations), corruption may lead to relatively more competition. I employ unique data on competition, corruption, and institutional quality across U.S. states from 1997 to 2009 and report that a higher level of corruption is associated with relatively more competition in states with low levels of institutional quality. However, as institutional quality improves, the effect of corruption worsens. Thus, institutional quality is a fundamental determinant of the corruption-competition relationship. Improving institutional quality, while at the same time reducing corruption, will increase competition and likely improve economic outcomes. (JEL D73, O17, L26).
AB - This article argues that the effect of corruption on competition is dependent on the institutional environment. When institutions are relatively efficient, observed corruption is likely to be associated with relatively less competition. Conversely, in areas with low quality institutions (e.g., excessively burdensome regulations), corruption may lead to relatively more competition. I employ unique data on competition, corruption, and institutional quality across U.S. states from 1997 to 2009 and report that a higher level of corruption is associated with relatively more competition in states with low levels of institutional quality. However, as institutional quality improves, the effect of corruption worsens. Thus, institutional quality is a fundamental determinant of the corruption-competition relationship. Improving institutional quality, while at the same time reducing corruption, will increase competition and likely improve economic outcomes. (JEL D73, O17, L26).
UR - http://www.scopus.com/inward/record.url?scp=84994424597&partnerID=8YFLogxK
U2 - 10.1111/ecin.12378
DO - 10.1111/ecin.12378
M3 - Article
AN - SCOPUS:84994424597
VL - 55
SP - 137
EP - 159
JO - Economic Inquiry
JF - Economic Inquiry
SN - 0095-2583
IS - 1
ER -