Abstract
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 language | English |
|---|---|
| Pages (from-to) | 326-335 |
| Number of pages | 10 |
| Journal | Journal of Comparative Economics |
| Volume | 21 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 1 Dec 1995 |
| Externally published | Yes |