Beneficial collusion in corruption control: The case of nonmonetary penalties
AbstractWe analyze a corruption model where a principal seeks to control an agentâs corruption by supplementing a costless noncollusive outside detector such as the media with a collusive internal supervisor. The principalâs objective is to minimize the overall costs, made up of enforcement costs and social costs of corruption. If the penalties on the corrupt agent and a failing supervisor are nonmonetary in nature and yet the two parties can engage in monetary side-transfers, the principal may stand to benefit by allowing supervisor-agent collusion. This benefit may even prompt the principal to actively encourage collusion by hiring a dishonest supervisor in strict preference over an honest supervisor.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 81 (2006)
Issue (Month): 2 (December)
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Web page: http://www.elsevier.com/locate/devec
Other versions of this item:
- Mehmet Bac & Parimal Kanti Bag, 2005. "Beneficial Collusion in Corruption Control: The Case of Nonmonetary Penalties," School of Economics Discussion Papers 0205, School of Economics, University of Surrey.
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
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