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The Social Costs of Deregulation in a Fight Against Corruption: A Case Study on Driver’s Licenses in Mexico City

  • Konrad Grabiszewski EMAIL logo und Alex Horenstein ORCID logo
Veröffentlicht/Copyright: 4. Dezember 2024
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Abstract

Various anti-corruption tools have been proposed in the literature. In this article, we focus on deregulation. By removing red tape, the opportunities for bribery are reduced. At the same time, however, social costs can increase due to reemergence of inefficiencies that the regulation was intended to target in the first place. We analyze data from Mexico City, where a driving test was abolished to combat petty corruption prevalent in testing centers. A natural concern is that roads would become more dangerous. We find that this concern appears to be unwarranted; if anything, roads seem to have become safer.

JEL Classification: D73; H11; K42

Corresponding author: Konrad Grabiszewski, HEC Paris in Qatar, Doha, Qatar, E-mail:

We would like to thank participants in seminars at the Banco de Mexico and ITAM, as well as Philip Cook, Pritha Dev, Mikhail Drugov, Santiago García-Verdú, Rahul Giri, Carlos Lever Guzman, Antonio Lloret, Jorge Moreno, Paolo Morganti, Sam Peltzman, Avichai Snir, and Rubina Verma for their very valuable comments. We thank Luis Cesar Castaneda Valdes and David Rodriguez Estrada for the excellent research assistance they provided.


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Received: 2023-11-10
Accepted: 2024-04-08
Published Online: 2024-12-04

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