caa a22 4500 445829591 CHVBK 20180317145309.0 cr unu---uuuuu 170323e20110801xx s 000 0 eng 10.1007/s10657-010-9205-8 doi (NATIONALLICENCE)springer-10.1007/s10657-010-9205-8 Azpitarte Francisco STICERD-London School of Economics & Universidade de Vigo, London, England, UK aut Can corruption constrain the size of governments? [Elektronische Daten] [Francisco Azpitarte] This paper analyzes the relationship between government size and the level of corruption. We propose a theoretical model where production decisions and corrupt behavior are endogenously determined. We model corruption assuming production in the formal sector is regulated by public officials who can use their public power for private gain. In this context, the underground economy emerges as an outside option that allows entrepreneurs to avoid dealing with bureaucrats. The fact that investments in the informal sector may influence public finances, introduces the possibility of multiple equilibria with different levels of corruption. Consistent with previous theoretical works and recent empirical evidence, we find out that corruption and the shadow economy are complements as they positively correlate across equilibria, which implies that corruption may limit the size of the public sector. Springer Science+Business Media, LLC, 2010 Tax revenue nationallicence Corruption nationallicence Underground economy nationallicence European Journal of Law and Economics Springer US; http://www.springer-ny.com 32/1(2011-08-01), 1-14 0929-1261 32:1<1 2011 32 10657 https://doi.org/10.1007/s10657-010-9205-8 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1007/s10657-010-9205-8 text/html Onlinezugriff via DOI NATIONALLICENCE 100 1- Azpitarte Francisco STICERD-London School of Economics & Universidade de Vigo, London, England, UK aut NATIONALLICENCE 773 0- European Journal of Law and Economics Springer US; http://www.springer-ny.com 32/1(2011-08-01), 1-14 0929-1261 32:1<1 2011 32 10657 Metadata rights reserved Springer special CC-BY-NC licence nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-springer