Corruption, Accountability and Efficiency. An Application to Municipal Solid Waste Services

This paper explores the link between accountability, corruption and efficiency in the context of a career concern model where politically con- nected local monopolies are in charge of the provision of a local public service. We fi?nd that both corruption and a low degree of accountabil- ity induce managers to reduce effort levels, thereby contributing to drive down efficiency. Our predictions are tested using data on solid waste management services provided by a large sample of Italian municipalities. The results of the estimation of a stochastic cost frontier model provide robust evidence that high corruption levels and low degrees of account- ability substantially increase cost inefficiency. Finally, we show that the negative impact of corruption is weaker for municipalities ruled by left- wing parties, while the positive impact of accountability is stronger if the refuse collection service is managed by limited liability companies.