The Effects Of Government Corruption Game On Investment

In the development of China,corruption is always an important issue for the ruling party and a hotspot of society.In the past long time,China faces the serious problem of corruption but is in a high-speed way of growth,which is a Double Paradox.The study of the relationship between corruption and economic growth in China has become one of the focuses of academic circles.However,there is a general focus on the relationship between local corruption and economic development,without considerations about the relative impact between corruption levels and economic development in neighboring areas.This article aims at how to consider the impact of corruption on investment.We set up a game theory model,which is about the corruption between two governments mostly like Cournot duopoly model,to find that there exist two kinds of possible pure equilibrium strategies between "Integrity Competition" and "Corruption Trap" when the firms consider the inter-regional relative corruption level in investment decision.What's more,the conclusion of the model is that the corruption of the neighboring governments will appear convergence phenomenon,that is,the spatial correlation of corruption.In this paper,we use the spatial econometric method to solve the problem of spatial autocorrelation,and the effect of corruption on investment is more accurately estimated.In order to get the parameter of the external spillover effect of corruption,we use the spatial Durbin model(SDM).We proved that the government's corruption will play a negative role in the local investment,and the spillover effect on the neighboring areas is positive,which will increase the investment in the adjacent areas.The reason may be due to the increase of relative level corruption,which causes the transfer of investment.We also find that the government's looting and impact of the economy have the interaction of corruption.If the degree of government plunder reaches an enough high level,the role of corruption on investment will be positive,which reflects the burden of tax is too high or the scale of government is too large,and the resources are misallocated.In this time,the enterprises can get excess returns or reduce transaction costs through corruption,thereby increasing investment.