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Corruption by Design: Bribery in Chinese Enterprise Licensing

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  • Manion, Melanie
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    Abstract

    This article analyzes as a game a common form of corruption in Chinese bureaucracies: payment of bribes to officials for a standard good that is not in fixed supply and to which those paying bribes are, in principle, fully entitled. Formal structures and informal expectations have been identified through field research as features of "institutional design" that indicate an asymmetric information game. Bribery is derived as an equilibrium solution in the game. Exercises in comparative statics reveal the robustness of bribery when game parameter values are altered to reflect changes in institutional design. The exercises indicate that reducing corruption, in the sense of reducing bribe sizes, is relatively unproblematic. To move away entirely from corrupt equilibria, however, requires very substantial changes in institutional design and may not be feasible through changes in formal structures alone. Copyright 1996 by Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Journal of Law, Economics and Organization.

    Volume (Year): 12 (1996)
    Issue (Month): 1 (April)
    Pages: 167-95

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    Handle: RePEc:oup:jleorg:v:12:y:1996:i:1:p:167-95

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    Cited by:
    1. Humphry Hung, 2008. "Normalized Collective Corruption in a Transitional Economy: Small Treasuries in Large Chinese Enterprises," Journal of Business Ethics, Springer, vol. 79(1), pages 69-83, April.
    2. Susan-Rose Ackerman, 1997. "Corruption, Infefficiency and Economic Growth," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 24, pages 3-20.
    3. Bin Dong & Benno Torgler, 2010. "The Causes of Corruption: Evidence from China," CREMA Working Paper Series 2010-07, Center for Research in Economics, Management and the Arts (CREMA).
    4. Geoffrey Hodgson & Shuxia Jiang, 2008. "La economía de la corrupción y la corrupción de la economía: una perspectiva institucionalista," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 10(18), pages 55-80, January-J.
    5. Ren Li, 2013. "Media Corruption: A Chinese Characteristic," Journal of Business Ethics, Springer, vol. 116(2), pages 297-310, August.
    6. Ira N. Gang & Amal Sanyal & Omkar Goswami, 1998. "Corruption, Tax Evasion and the Laffer Curve," Departmental Working Papers 199604, Rutgers University, Department of Economics.
    7. Ogus, Anthony, 2005. "Towards Appropriate Institutional Arrangements for Regulation in Less Developed Countries," Centre on Regulation and Competition (CRC) Working papers 30644, University of Manchester, Institute for Development Policy and Management (IDPM).
    8. Carolyn M. Warner, 2002. "Creating a Common Market for Fraud and Corruption in the European Union: an Institutional Accident, or a Deliberate Strategy?," EUI-RSCAS Working Papers 31, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    9. Klaus Abbink & Bernd Irlenbusch & Elke Renner, 2002. "An Experimental Bribery Game," Journal of Law, Economics and Organization, Oxford University Press, vol. 18(2), pages 428-454, October.
    10. Richard Damania & Erkan Yalcin, 2005. "Corruption and Political Competition," Microeconomics 0510012, EconWPA.
    11. Yang, David Da-hua, 2005. "Corruption by monopoly: Bribery in Chinese enterprise licensing as a repeated bargaining game," China Economic Review, Elsevier, vol. 16(2), pages 171-188.
    12. Luca Correani, 2004. "Corruzione burocratica e preferenze sociali: un modello interpretativo," Public Economics 0406008, EconWPA.
    13. Abbink, Klaus, 2004. "Staff rotation as an anti-corruption policy: an experimental study," European Journal of Political Economy, Elsevier, vol. 20(4), pages 887-906, November.
    14. Ram Mudambi & Pietro Navarra & Andrew Delios, 2013. "Government regulation, corruption, and FDI," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 487-511, June.

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