Skip to main content

Advertisement

Log in

Corruption, federalism, and policy formation in the OECD: the case of energy policy

  • Published:
Public Choice Aims and scope Submit manuscript

Abstract

We investigate whether the effect of government corruption is conditional on a country’s institutional structure. Federal systems have an additional layer of government, making lobbying relatively more costly. We investigate whether the effect of government corruption on environmental policy (in the form of restrictions on energy use) is conditional on a federal system being in place. Using 1982–96 data from 11 industry sectors in 12 OECD economies we find that while greater government corruption reduces the stringency of environmental policy, the effect declines in federal systems.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aidt, T. S. (2003). Economic analysis of corruption: A survey. Economic Journal, 113, F632–652.

    Article  Google Scholar 

  • Aidt, T. S., & Hwang, U. (2008). On the internalization of cross-national externalities through political markets: The case of labour standards. Journal of Institutional and Theoretical Economics, 164, 534–567.

    Article  Google Scholar 

  • Antweiler, W., Copeland, B., & Taylor, M. S. (2001). Is free trade good for the environment? American Economic Review, 91, 877–908.

    Google Scholar 

  • Barbier, E. B., Damania, R., & Léonard, D. (2005). Corruption, trade, and resource conversion. Journal of Environmental Economics and Management, 50, 276–299.

    Article  Google Scholar 

  • Bardhan, P. (1997). Corruption and development: A review of issues. Journal of Economic Literature, 35, 1320–1346.

    Google Scholar 

  • Bergstrom, T., Blume, L., & Varian, H. (1986). On the private provision of public goods. Journal of Public Economics, 29, 25–49.

    Article  Google Scholar 

  • Bursens, P., & Geeraerts, K. (2006). EU environmental policy-making in Belgium: Who keeps the gate? European Integration, 28, 159–179.

    Article  Google Scholar 

  • Congressional Budget Office (CBO) (1997). Federalism and environmental protection: Case studies for drinking water and ground-level ozone. Washington: U.S. Congress.

    Google Scholar 

  • Curry, D. (2005). Beyond federalism: The Kyoto Protocol and multi-level governance in Canada. Mimeo, Simon Fraser University.

  • Damania, R., & Fredriksson, P. G. (2007). Trade policy: What’s welfare got to do with it? Economics Letters, 96, 64–69.

    Article  Google Scholar 

  • Eliste, P., & Fredriksson, P. G. (2002). Environmental regulations, transfers, and trade: Theory and evidence. Journal of Environmental Economics and Management, 43, 234–250.

    Article  Google Scholar 

  • Fisman, R., & Gatti, R. (2002). Decentralization and corruption: Evidence across countries. Journal of Public Economics, 83, 325–345.

    Article  Google Scholar 

  • Fitzgerald, E. A. (1996). The constitutional division of powers with respect to the environment in the United States. In K. M. Holland, F. L. Morton, & B. Gilligan (Eds.), Federalism and the environment: Environmental policymaking in Australia, Canada, and the United States. Westport: Greenwood.

    Google Scholar 

  • Fomby, T. B., & Lin, L. (2006). A change point analysis of the impact of “environmental federalism” on aggregate air quality in the United States: 1940–98. Economic Inquiry, 44, 109–120.

    Article  Google Scholar 

  • Forum of Federations (2006). www.forumfed.org.

  • Fredriksson, P. G., & Millimet, D. L. (2007). Legislative organization and pollution taxation. Public Choice, 131, 217–242.

    Article  Google Scholar 

  • Fredriksson, P. G., & Svensson, J. (2003). Political instability, corruption and policy formation: The case of environmental policy. Journal of Public Economics, 87, 1383–1405.

    Article  Google Scholar 

  • Fredriksson, P. G., Vollebergh, H. R. J., & Dijkgraaf, E. (2004). Corruption and energy efficiency in OECD countries: Theory and evidence. Journal of Environmental Economics and Management, 47, 207–231.

    Article  Google Scholar 

  • Grossman, G., & Helpman, E. (1994). Protection for sale. American Economic Review, 84, 833–850.

    Google Scholar 

  • Hamilton, J. D. (1994). Time series analysis. Princeton: Princeton University Press.

    Google Scholar 

  • Harrison, K. A. (1996). Passing the buck: federalism and Canadian environmental policy. Vancouver: University of British Columbia Press.

    Google Scholar 

  • Helfand, G. E. (1992). Standards versus standards: The effects of different pollution restrictions. American Economic Review, 81, 622–634.

    Google Scholar 

  • Henisz, W. J. (2000). The institutional environment for economic growth. Economics and Politics, 12, 1–31.

    Article  Google Scholar 

  • Hird, J. A. (1993). Congressional voting on superfund: Self-interest or ideology? Public Choice, 77, 333–357.

    Article  Google Scholar 

  • Holland, K. M. (1996). Introduction. In K. M. Holland, F. L. Morton, & B. Gilligan (Eds.), Federalism and the environment: Environmental policymaking in Australia, Canada, and the United States. Westport: Greenwood.

    Google Scholar 

  • Holmes, G., Singh, B. R., & Theodore, L. (1993). Handbook of environmental management and technology. New York: Wiley.

    Google Scholar 

  • Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53–74.

    Article  Google Scholar 

  • IMF (2005). IMF statistics. Available from IMF Web site: http://www.imf.org/external/np/sta/index.htm.

  • Jain, A. K. (2001). Corruption: A review. Journal of Economic Surveys, 15, 71–121.

    Article  Google Scholar 

  • Joskow, P. L. (2002). U.S. energy policy during the 1990s. In J. A. Frankel & P. R. Orszag (Eds.), American economic policy in the 1990s. Cambridge: MIT.

    Google Scholar 

  • Kau, J. B., & Rubin, P. H. (1979). Public interest lobbies: Membership and influence. Public Choice, 34, 45–54.

    Article  Google Scholar 

  • Keefer, P., & Stasavage, D. (2003). The limits of delegation: Veto players, central bank independence and the credibility of monetary policy. American Political Science Review, 97, 407–423.

    Article  Google Scholar 

  • Kuper, G. H., & van Soest, D. P. (2003). Path-dependency and input substitution: Implications for energy policy modeling. Energy Economics, 25, 397–407.

    Article  Google Scholar 

  • Leveque, F. (Ed.) (1996). Environmental policy in Europe. Cheltenham: Edward Elgar.

    Google Scholar 

  • Lijphart, A. (1984). Democracies. New Haven/London: Yale University Press.

    Google Scholar 

  • List, J. A., & Gerking, S. (2000). Regulatory federalism and environmental protection in the United States. Journal of Regional Science, 40, 453–471.

    Article  Google Scholar 

  • List, J. A., & Sturm, D. M. (2006). How elections matter: Theory and evidence from environmental policy. Quarterly Journal of Economics, 121, 1249–1281.

    Article  Google Scholar 

  • López, R., & Mitra, S. (2000). Corruption, pollution and the Kuznets environment curve. Journal of Environmental Economics and Management, 40, 137–150.

    Article  Google Scholar 

  • Matayas, L., & Sevestre, P. (1996). The econometrics of panel data. New York: Kluwer.

    Google Scholar 

  • Miller III, J. C., Shugart II, W. F., & Tollison, R. D. (1984). A note on centralized regulatory review. Public Choice, 43, 83–88.

    Article  Google Scholar 

  • Millimet, D. L. (2003). Assessing the empirical impact of environmental federalism. Journal of Regional Science, 43, 711–733.

    Article  Google Scholar 

  • Mitchell, R. C., Mertig, A. G., & Dunlap, R. E. (1992). Twenty years of environmental mobilization: Trends among national environmental organizations. In A. G. Mertig & R. E. Dunlap (Eds.), American environmentalism: The U.S. environmental movement, 1970–1990. London: Taylor & Francis.

    Google Scholar 

  • Morton, F. L. (1996). The constitutional division of powers with respect to the environment in Canada. In K. M. Holland, F. L. Morton & B. Gilligan (Eds.), Federalism and the environment: Environmental policymaking in Australia, Canada, and the United States. Westport: Greenwood.

    Google Scholar 

  • Naert, F. (1990). Pressure politics and government spending in Belgium. Public Choice, 67, 49–63.

    Article  Google Scholar 

  • Oates, W. E., & Portney, P. R. (2003). The political economy of environmental policy. In K. G. Mäler & J. Vincent (Eds.), The handbook of environmental economics. St. Louis: Elsevier.

    Google Scholar 

  • OECD (2000a). Energy balances, statistical compendium, ed. 01, CD-ROM. Paris: Organization for Economic Cooperation and Development.

  • OECD (2000b). Intersectoral database (ISDB). Paris: Organization for Economic Cooperation and Development.

    Google Scholar 

  • OECD (2003). Structural statistics for industry and services, Vol. 1, Release 2. Paris: Organization for Economic Cooperation and Development.

  • OECD (2005). Energy prices and taxes. Available from OECD Web site: http://oberon.sourceoecd.org. Paris: Organization for Economic Cooperation and Development.

  • Olson, M. (1965). The logic of collective action. Cambridge: Harvard University Press.

    Google Scholar 

  • Pelzman, S. (1984). Constituent interest and congressional voting. Journal of Law and Economics, 27, 181–210.

    Article  Google Scholar 

  • Persson, T., Tabellini, G., & Trebbi, F. (2003). Electoral rules and corruption. Journal of the European Economic Association, 1, 958–989.

    Article  Google Scholar 

  • Peterson, P. E. (1995). The price of federalism. Washington: Brookings.

    Google Scholar 

  • Potters, J., & Sloof, R. (1996). Interest groups: A survey of empirical models that try to assess their influence. European Journal of Political Economy, 12, 403–442.

    Article  Google Scholar 

  • Prat, A., & Rustichini, A. (2003). Games played through agents. Econometrica, 71, 989–1026.

    Article  Google Scholar 

  • Rose-Ackerman, S. (1997). The political economy of corruption. In K. A. Elliot (Ed.), Corruption and the global economy. Washington: Institute for International Economics.

    Google Scholar 

  • Stigler, G. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2, 3–21.

    Article  Google Scholar 

  • Swenden, W. (2002). Asymmetric federalism and coalition-making in Belgium. Publius, 32, 67–87.

    Google Scholar 

  • Swenden, W. (2005). What – if anything – can the European Union learn from Belgian federalism and vice versa. Regional and Federal Studies, 15, 187–204.

    Article  Google Scholar 

  • Transparency International (1996). Available from Transparency International Web site: www.transparency.org/content/download/2914/18028/file/cpi1996.pdf.

  • Tsebelis, G. (1995). Decision-making in political systems: Veto players in presidentialism, parliamentarism, multicameralism, and multipartyism. British Journal of Political Science, 25, 289–326.

    Article  Google Scholar 

  • Tsebelis, G. (1999). Veto players and law production in parliamentary democracies: An empirical analysis. American Political Science Review, 93, 591–608.

    Article  Google Scholar 

  • Treisman, D. (2000). The causes of corruption: A cross-national study. Journal of Public Economics, 76, 399–457.

    Article  Google Scholar 

  • Wälti, S. (2004). How multilevel structures affect environmental policy in industrialized countries. European Journal of Political Research, 43, 599–634.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Herman R. J. Vollebergh.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Fredriksson, P.G., Vollebergh, H.R.J. Corruption, federalism, and policy formation in the OECD: the case of energy policy. Public Choice 140, 205–221 (2009). https://doi.org/10.1007/s11127-009-9419-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11127-009-9419-x

Keywords

JEL Classification

Navigation