Corruption and Energy Efficiency in OECD Countries: Theory and Evidence

Abstract

We investigate the effect of corruption and industry sector size on energy policy outcomes. The main predictions of our theory are that: (i) greater corruptibility of policy makers reduces energy policy stringency; (ii) greater lobby group coordination costs (increased industry sector size) results in more stringent energy policy; and (iii) workers' and capital owners' lobbying efforts on energy policy are negatively related. These predictions are tested using a unique panel data set on the energy intensity of 11 sectors in 14 OECD countries for years 1982-1996. The evidence supports the predictions.

Keywords: Energy policy, political economy, corruption, collective action

JEL Classification: Q48, D73, D78