Journal Title
Title of Journal: Public Choice
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Abbravation: Public Choice
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Authors: Marco Pani
Publish Date: 2010/05/15
Volume: 148, Issue: 1-2, Pages: 163-196
Abstract
This paper analyzes how corruption alters policy decisions in democracy and examines whether this distortion can result in a longterm persistence of corruption even when the voters are well informed and rational By applying a citizencandidate model of representative democracy the paper analyzes how corruption distorts the allocation of resources between public and private consumption altering the policy preferences of elected and nonelected citizens in opposite directions The outcome is a reduction in real public expenditure and if the median voter’s demand for public goods is sufficiently elastic a reduction in taxes In this case some citizens benefit indirectly from corruption The paper also presents some empirical evidence that in democratic countries corruption results in lower tax revenue and proceeds to show that when this occurs citizens anticipating a shift in preferences in favor of public expenditure may support institutions that favor corruption This result complements the findings of other studies that have attributed the persistence of corruption in democracy to some failure on the part of the voters or the electoral system It also bears implications for developing effective anticorruption strategies and for redefining the role that can be played by the international community
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