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Corruption, lobbying and state capture

Begovic, Boris
This contribution aims to provide a comparative analysis of the effects of corruption and lobbying on social welfare viewed as alternative methods of state capture. The core of the paper is the formulation of two models (one with exogenous and the other with the endogenous rent), a comparative analysis of the welfare effects of corruption and lobbying. Corruption is more favorable in terms of the welfare effects when the amount of the rent is small; conversely, when the amount of the rent is large, lobbying is more favorable. However, taking into account that the generation of the rent due to public policies leads to inevitably dead weight loss, both corruption and lobbing are inferior compared to the first best solution where no rent is generated at all.
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Contributor: Center for Liberal-Democratic Studies - http://www.clds.rs/newsite/eng_clds.html
Topic: Economy and Development
Country: Serbia
Document Type: Economic Analyses and Commentaries
Year: 2005
Keywords: Corruption,Economic Policy, Social Capital
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