Corruption and energy efficiency in OECD countries: theory and evidence

We investigate the effect of corruption and industry sector size on energy policy outcomes. The main predictions of our theory are that: (i) greater corruptibility of policy makers reduces energy policy stringency; (ii) greater lobby group coordination costs (increased industry sector size) results in more stringent energy policy; and (iii) workers’ and capital owners’ lobbying efforts on energy policy are negatively related. These predictions are tested using a unique panel data set on the energy intensity of 11 sectors in 12 OECD countries for years 1982–1996. The evidence generally supports the predictions.