The Kornai effect and soft budget constraints

Wing Chung PUN

Research output: Journal PublicationsJournal Article (refereed)peer-review

7 Citations (Scopus)


The Kornai effect refers to situations where soft budget constraints lead to higher input demands. This paper studies the Kornai effect under different scenarios: nonrandom subsidy rate, random subsidy rate, and random and endogenous subsidy rate; and gives sufficient, sometimes necessary and sufficient, conditions for the Kornai effect to exist.
Original languageEnglish
Pages (from-to)326-335
Number of pages10
JournalJournal of Comparative Economics
Issue number3
Publication statusPublished - 1 Dec 1995
Externally publishedYes


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