CORRUPTION, PRODUCT MARKET COMPETITION, AND INSTITUTIONAL QUALITY: EMPIRICAL EVIDENCE FROM THE U.S. STATES

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

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).

Original languageEnglish
Pages (from-to)137-159
Number of pages23
JournalEconomic Inquiry
Volume55
Issue number1
DOIs
StatePublished - Jan 1 2017

Fingerprint Dive into the research topics of 'CORRUPTION, PRODUCT MARKET COMPETITION, AND INSTITUTIONAL QUALITY: EMPIRICAL EVIDENCE FROM THE U.S. STATES'. Together they form a unique fingerprint.

Cite this