Electoral Competition, Electoral Uncertainty and Corruption: Theory and Evidence from India.∗

Abstract

In developing countries with weak enforcement institutions, there is implicitly a large reliance on electoral incentives to reduce corruption. In this paper we study the effect of electoral competition on corruption when uncertainty in elections is high, as in many developing countries. Our theory focuses on the case of high uncertainty and shows that in this case there is a U-shaped relationship between electoral competition and corruption. The U-shape becomes flatter as uncertainty increases. We illustrate the predictions of the model with village level data on audit-detected irregularities and electoral competition from India.

Keywords: corruption, Electoral Competition, Uncertainty, Audit, Accountability