Yardstick Competition, Corruption, and Electoral Incentives

21 Pages Posted: 8 Jul 2008

See all articles by Ngo Van Long

Ngo Van Long

McGill University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Bodhisattva Sengupta

McGill University

Date Written: July 3, 2008

Abstract

This paper investigates the relationship between electoral incentives, institutions and corruption. We assume that voters use a yardstick criterion. The incumbent provides a public good and extracts rent, which are financed by imposing a distortionary tax. We demonstrate the possibility that yardstick competition itself fails to restrict rent seeking. We complement the static setting with a dynamic scenario where each incumbent politician faces an election after a finite, fixed term. Under relative performance evaluation, dynamic incentives impose more restriction on rent appropriation in comparison to the static case.

Keywords: yardstick competition, rent-seeking, public good, electoral incentives

JEL Classification: H11, H73, H77

Suggested Citation

Van Long, Ngo and Sengupta, Bodhisattva, Yardstick Competition, Corruption, and Electoral Incentives (July 3, 2008). CESifo Working Paper Series No. 2345, Available at SSRN: https://ssrn.com/abstract=1156760 or http://dx.doi.org/10.2139/ssrn.1156760

Ngo Van Long (Contact Author)

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

Bodhisattva Sengupta

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

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