Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories
MENDELU Working Papers in Business and Economics No. 24/2012
23 Pages Posted: 8 Jun 2012 Last revised: 30 Jan 2013
Date Written: June 7, 2012
Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, chap 5). The modern Public Choice proponents argue that corruption and lobbying might influence the efficiency of the rule of law. While Chicago Public Choice scholars model how legal lobbying, which is corruption in Virginia Public Choice perspective, improves efficiency of the rule of law and thus the overall economic efficiency, the Virginia Public Choice models explain how corruption reduces efficiency of the rule of law and thus the overall economic efficiency. In this short paper, we present a brief survey distinguishing between arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption influences economic efficiency. We argue that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic rent-seeking.
Keywords: Bureaucracy, corruption, economic efficiency, Chicago Public Choice, lobbying, Virginia Public Choice, rent-seeking, rule of law
JEL Classification: D74, K42, P3
Suggested Citation: Suggested Citation