Corruption and Competition

56 Pages Posted: 2 Nov 2015 Last revised: 27 Sep 2018

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Jun "QJ" Qian

Fudan University - International School of Finance (FISF); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Lin Shen

INSEAD

Multiple version iconThere are 2 versions of this paper

Date Written: September 4, 2018

Abstract

An interesting aspect of corruption is that its damaging effects on economic performance differ significantly across countries. In this paper, we show that if a central government collects sufficient taxes, it can curtail corruption by paying for performance of local government officials. An alternative way to reduce corruption is to introduce competition among local government officials. Difference in taxing ability and the magnitude of competition among government officials can help explain the heterogeneous effects of corruption across countries.

Keywords: Corruption, institutions, competition, taxes, user fee

JEL Classification: O0, H0, P5

Suggested Citation

Allen, Franklin and Qian, Jun and Shen, Lin, Corruption and Competition (September 4, 2018). Available at SSRN: https://ssrn.com/abstract=2685219 or http://dx.doi.org/10.2139/ssrn.2685219

Franklin Allen (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Jun Qian

Fudan University - International School of Finance (FISF) ( email )

220 Handan Road
Shanghai, 200433
China

HOME PAGE: http://fisf.fudan.edu.cn/en_show-112-69.html

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Lin Shen

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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