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A Simplistic General Equilibrium Theory Of Corruption

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Author Info
STEVEN N. S. CHEUNG
Abstract

The author's simplistic view of corruption is that all politicians and government officials-like everyone else-are constrained self-maximizers. They therefore establish or maintain regulations and controls with the intent to facilitate corruption, which then becomes a source of income for them. Under private enterprise, where resources are transferable and movable, competition limits the ability to corrupt. However, in state enterprises, limiting corruption through competition is difficult. Corruption can help offset the inefficiencies of a communist or hierarchical system, as the economy makes a transition toward private property. But the danger is that corruption will become institutionalized and develop well-defined, transferable rights. Once that happens, the economy gets stuck there, as it has in India. Thus, in reforming a communist system-as that of China-into a private property system, gradualism will not do. Copyright 1996 Western Economic Association International.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1465-7287.1996.tb00618.x
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Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 14 (1996)
Issue (Month): 3 (07)
Pages: 1-5
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Handle: RePEc:bla:coecpo:v:14:y:1996:i:3:p:1-5

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  1. Björn Frank, 2004. "Zehn Jahre empirische Korruptionsforschung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(2), pages 184-199.
  2. André Carraro & Ronald O. Hillbrecht, 2003. "Modelos Microeconômicos de Corrupção Burocrática e Seus Determinantes Econômicos," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] d36, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  3. Jimmy Torrez, 2002. "The effect of openness on corruption," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 11(4), pages 387-403, December. [Downloadable!] (restricted)
  4. Ira N. Gang & Amal Sanyal & Omkar Goswami, 1998. "Corruption, Tax Evasion and the Laffer Curve," Departmental Working Papers 199604, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  5. Krug, B. & Hendrischke, H., 2006. "Framing China: Transformation and Institutional Change," Research Paper ERS-2006-025-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
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