The dynamics of corruption with the ratchet effect
AbstractThis paper provides a simple model of corruption dynamics with the ratchet effect. Corrupt officials have ex post the incentive to price discriminate entrepreneurs based on the entry decisions made in an earlier period. The inability of government officials to commit to future money demands induces entrepreneurs to delay entry in order to receive a discount in the permit price later. Even though the dynamic setting leaves the corrupt official with less extortion power, social welfare may decrease. We also explore the effect of the official's tenure stability on the extent of corruption. This allows us to identify circumstances under which the often observed practice of job rotation can help mitigate corruption. --
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 87 (2003)
Issue (Month): 3-4 (March)
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Web page: http://www.elsevier.com/locate/inca/505578
Other versions of this item:
- Jay Pil Choi & Marcel Thum, 2000. "The Dynamics of Corruption with the Ratchet Effect," CESifo Working Paper Series 334, CESifo Group Munich.
- Choi, Jay Pil & Thum, Marcel, 2001. "The dynamics of corruption with the Ratchet effect," Dresden Discussion Paper Series in Economics 04/01, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
- D9 - Microeconomics - - Intertemporal Choice and Growth
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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