Abstract
This study shows that the level of trust matters for how corruption affects public policy outcomes in the long-run, in particular the stringency of environmental policies. We argue that the level of trust affects the relative strength of industry- and environmental lobby groups, and therefore the effect of corruption on the stringency of environmental policies. We use a novel index of the level of corruption in each state which uses Associated Press (AP) news wires. We find that higher corruption reduces the stringency of environmental policies when the level of trust is low, but the effect declines and even becomes positive at higher levels of trust.
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