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Graft, Bribes, and the Practice of Corruption

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  • Juan D. Carrillo
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    Abstract

    We construct a dynamic model of corruption in organizations where officials privately know their propensity for corruption and clients optimally choose the bribe offered. We show that there is a continuum set of stationary bribe equilibria due exclusively to the dynamic nature of the model and the endogenous determination of bribes. This can explain why similar countries have stable but different "implicit prices" for the same illegal services. We also show that, by not considering the reaction of clients, traditional analysis have systematically overestimated the beneficial effect of increasing wages as an anticorruption measure. Copyright (c) 2000 Massachusetts Institute of Technology.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

    Volume (Year): 9 (2000)
    Issue (Month): 2 (06)
    Pages: 257-288

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    Handle: RePEc:bla:jemstr:v:9:y:2000:i:2:p:257-288

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    Cited by:
    1. Michael Dietrich & Jolian McHardy & Abhijit Sharma, 2012. "Firm Corruption in the Presence of an Auditor," Working Paper Series 20_12, The Rimini Centre for Economic Analysis.
    2. Fahad Khalil & Jacques Lawarrée & Sungho Yun, 2007. "Bribery vs. Extortion: Allowing the Lesser of two Evils," CESifo Working Paper Series 1993, CESifo Group Munich.

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