Public Choice

, Volume 140, Issue 1–2, pp 205–221 | Cite as

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

  • Per G. Fredriksson
  • Herman R. J. VolleberghEmail author


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.


Corruption Institutions Federalism Political economy Energy efficiency 

JEL Classification

Q48 D73 D78 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aidt, T. S. (2003). Economic analysis of corruption: A survey. Economic Journal, 113, F632–652. CrossRefGoogle Scholar
  2. 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. CrossRefGoogle Scholar
  3. Antweiler, W., Copeland, B., & Taylor, M. S. (2001). Is free trade good for the environment? American Economic Review, 91, 877–908. Google Scholar
  4. Barbier, E. B., Damania, R., & Léonard, D. (2005). Corruption, trade, and resource conversion. Journal of Environmental Economics and Management, 50, 276–299. CrossRefGoogle Scholar
  5. Bardhan, P. (1997). Corruption and development: A review of issues. Journal of Economic Literature, 35, 1320–1346. Google Scholar
  6. Bergstrom, T., Blume, L., & Varian, H. (1986). On the private provision of public goods. Journal of Public Economics, 29, 25–49. CrossRefGoogle Scholar
  7. Bursens, P., & Geeraerts, K. (2006). EU environmental policy-making in Belgium: Who keeps the gate? European Integration, 28, 159–179. CrossRefGoogle Scholar
  8. Congressional Budget Office (CBO) (1997). Federalism and environmental protection: Case studies for drinking water and ground-level ozone. Washington: U.S. Congress. Google Scholar
  9. Curry, D. (2005). Beyond federalism: The Kyoto Protocol and multi-level governance in Canada. Mimeo, Simon Fraser University. Google Scholar
  10. Damania, R., & Fredriksson, P. G. (2007). Trade policy: What’s welfare got to do with it? Economics Letters, 96, 64–69. CrossRefGoogle Scholar
  11. Eliste, P., & Fredriksson, P. G. (2002). Environmental regulations, transfers, and trade: Theory and evidence. Journal of Environmental Economics and Management, 43, 234–250. CrossRefGoogle Scholar
  12. Fisman, R., & Gatti, R. (2002). Decentralization and corruption: Evidence across countries. Journal of Public Economics, 83, 325–345. CrossRefGoogle Scholar
  13. 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
  14. 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. CrossRefGoogle Scholar
  15. Forum of Federations (2006).
  16. Fredriksson, P. G., & Millimet, D. L. (2007). Legislative organization and pollution taxation. Public Choice, 131, 217–242. CrossRefGoogle Scholar
  17. Fredriksson, P. G., & Svensson, J. (2003). Political instability, corruption and policy formation: The case of environmental policy. Journal of Public Economics, 87, 1383–1405. CrossRefGoogle Scholar
  18. 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. CrossRefGoogle Scholar
  19. Grossman, G., & Helpman, E. (1994). Protection for sale. American Economic Review, 84, 833–850. Google Scholar
  20. Hamilton, J. D. (1994). Time series analysis. Princeton: Princeton University Press. Google Scholar
  21. Harrison, K. A. (1996). Passing the buck: federalism and Canadian environmental policy. Vancouver: University of British Columbia Press. Google Scholar
  22. Helfand, G. E. (1992). Standards versus standards: The effects of different pollution restrictions. American Economic Review, 81, 622–634. Google Scholar
  23. Henisz, W. J. (2000). The institutional environment for economic growth. Economics and Politics, 12, 1–31. CrossRefGoogle Scholar
  24. Hird, J. A. (1993). Congressional voting on superfund: Self-interest or ideology? Public Choice, 77, 333–357. CrossRefGoogle Scholar
  25. 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
  26. Holmes, G., Singh, B. R., & Theodore, L. (1993). Handbook of environmental management and technology. New York: Wiley. Google Scholar
  27. Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53–74. CrossRefGoogle Scholar
  28. IMF (2005). IMF statistics. Available from IMF Web site:
  29. Jain, A. K. (2001). Corruption: A review. Journal of Economic Surveys, 15, 71–121. CrossRefGoogle Scholar
  30. 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
  31. Kau, J. B., & Rubin, P. H. (1979). Public interest lobbies: Membership and influence. Public Choice, 34, 45–54. CrossRefGoogle Scholar
  32. 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. CrossRefGoogle Scholar
  33. Kuper, G. H., & van Soest, D. P. (2003). Path-dependency and input substitution: Implications for energy policy modeling. Energy Economics, 25, 397–407. CrossRefGoogle Scholar
  34. Leveque, F. (Ed.) (1996). Environmental policy in Europe. Cheltenham: Edward Elgar. Google Scholar
  35. Lijphart, A. (1984). Democracies. New Haven/London: Yale University Press. Google Scholar
  36. List, J. A., & Gerking, S. (2000). Regulatory federalism and environmental protection in the United States. Journal of Regional Science, 40, 453–471. CrossRefGoogle Scholar
  37. List, J. A., & Sturm, D. M. (2006). How elections matter: Theory and evidence from environmental policy. Quarterly Journal of Economics, 121, 1249–1281. CrossRefGoogle Scholar
  38. López, R., & Mitra, S. (2000). Corruption, pollution and the Kuznets environment curve. Journal of Environmental Economics and Management, 40, 137–150. CrossRefGoogle Scholar
  39. Matayas, L., & Sevestre, P. (1996). The econometrics of panel data. New York: Kluwer. Google Scholar
  40. Miller III, J. C., Shugart II, W. F., & Tollison, R. D. (1984). A note on centralized regulatory review. Public Choice, 43, 83–88. CrossRefGoogle Scholar
  41. Millimet, D. L. (2003). Assessing the empirical impact of environmental federalism. Journal of Regional Science, 43, 711–733. CrossRefGoogle Scholar
  42. 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
  43. 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
  44. Naert, F. (1990). Pressure politics and government spending in Belgium. Public Choice, 67, 49–63. CrossRefGoogle Scholar
  45. 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
  46. OECD (2000a). Energy balances, statistical compendium, ed. 01, CD-ROM. Paris: Organization for Economic Cooperation and Development. Google Scholar
  47. OECD (2000b). Intersectoral database (ISDB). Paris: Organization for Economic Cooperation and Development. Google Scholar
  48. OECD (2003). Structural statistics for industry and services, Vol. 1, Release 2. Paris: Organization for Economic Cooperation and Development. Google Scholar
  49. OECD (2005). Energy prices and taxes. Available from OECD Web site: Paris: Organization for Economic Cooperation and Development.
  50. Olson, M. (1965). The logic of collective action. Cambridge: Harvard University Press. Google Scholar
  51. Pelzman, S. (1984). Constituent interest and congressional voting. Journal of Law and Economics, 27, 181–210. CrossRefGoogle Scholar
  52. Persson, T., Tabellini, G., & Trebbi, F. (2003). Electoral rules and corruption. Journal of the European Economic Association, 1, 958–989. CrossRefGoogle Scholar
  53. Peterson, P. E. (1995). The price of federalism. Washington: Brookings. Google Scholar
  54. 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. CrossRefGoogle Scholar
  55. Prat, A., & Rustichini, A. (2003). Games played through agents. Econometrica, 71, 989–1026. CrossRefGoogle Scholar
  56. 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
  57. Stigler, G. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2, 3–21. CrossRefGoogle Scholar
  58. Swenden, W. (2002). Asymmetric federalism and coalition-making in Belgium. Publius, 32, 67–87. Google Scholar
  59. Swenden, W. (2005). What – if anything – can the European Union learn from Belgian federalism and vice versa. Regional and Federal Studies, 15, 187–204. CrossRefGoogle Scholar
  60. Transparency International (1996). Available from Transparency International Web site:
  61. Tsebelis, G. (1995). Decision-making in political systems: Veto players in presidentialism, parliamentarism, multicameralism, and multipartyism. British Journal of Political Science, 25, 289–326. CrossRefGoogle Scholar
  62. Tsebelis, G. (1999). Veto players and law production in parliamentary democracies: An empirical analysis. American Political Science Review, 93, 591–608. CrossRefGoogle Scholar
  63. Treisman, D. (2000). The causes of corruption: A cross-national study. Journal of Public Economics, 76, 399–457. CrossRefGoogle Scholar
  64. Wälti, S. (2004). How multilevel structures affect environmental policy in industrialized countries. European Journal of Political Research, 43, 599–634. CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  • Per G. Fredriksson
    • 1
  • Herman R. J. Vollebergh
    • 2
    • 3
    Email author
  1. 1.University of LouisvilleLouisvilleUSA
  2. 2.Tinbergen InstituteErasmus University RotterdamRotterdamThe Netherlands
  3. 3.Netherlands Environmental Assessment AgencyBilthovenThe Netherlands

Personalised recommendations