Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories

Acta VŠFS, Vol. 6, No. 2, pp. 132-150, 2012

19 Pages Posted: 7 Jun 2012 Last revised: 9 Oct 2012

See all articles by Tomáš Otáhal

Tomáš Otáhal

Mendel University - Faculty of Economics and Business Administration

Ladislava Grochová

Mendel University - Faculty of Economics and Business Administration

Multiple version iconThere are 3 versions of this paper

Date Written: June 7, 2012

Abstract

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

Otáhal, Tomáš and Grochová, Ladislava, Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories (June 7, 2012). Acta VŠFS, Vol. 6, No. 2, pp. 132-150, 2012, Available at SSRN: https://ssrn.com/abstract=2079495

Tomáš Otáhal (Contact Author)

Mendel University - Faculty of Economics and Business Administration ( email )

Staňkova 578/16b
Brno, 602 00
Czech Republic

Ladislava Grochová

Mendel University - Faculty of Economics and Business Administration ( email )

Zemědělská 1a
Brno, 613 00
Czech Republic
+420 545 132 701 (Phone)
+420 545 132 797 (Fax)

HOME PAGE: http://www.pef.mendelu.cz/en/?lang=en

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