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

20 Pages Posted: 1 Feb 2014 Last revised: 7 Feb 2014

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

Date Written: January 29, 2011

Abstract

Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, chap 5). Modern Public Choice proponents argue that corruption and lobbying might influence the rule of law’s efficiency. While Chicago Public Choice scholars model how legal lobbying improves the rule of law’s efficiency’s efficiency and thus overall economic efficiency, the Virginia Public Choice models explain how corruption and lobbying reduces the rule of law’s efficiency’s efficiency and thus overall economic efficiency. In this short paper, we present a brief survey distinguishing between the arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption and legal lobbying influence 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, the Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories (January 29, 2011). Available at SSRN: https://ssrn.com/abstract=2387650 or http://dx.doi.org/10.2139/ssrn.2387650

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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