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Corruption, Supervision, and the Structure of Hierarchies

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  • Bac, Mehmet

Abstract

This article studies the relation between the structure of monitoring hierarchies and corruption, that is, the expected number of bribed members. The model allows for internal corruption, a form of collusion eliminating accountability (monitoring) in the hierarchy. It is shown that the number of subordinates in a corruption-minimizing hierarchy is constrained by the prospect of internal corruption and/or monitoring costs. This constraint may generate structurally independent segments. When its members are provided with the same incentive system, the middle rank of a supervision chain displays the lowest external corruption, but there is more scope for internal corruption in the upper part than in the lower part. 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): 2 (October)
Pages: 277-98

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Handle: RePEc:oup:jleorg:v:12:y:1996:i:2:p:277-98

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Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
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Cited by:
  1. Ira N. Gang & Amal Sanyal & Omkar Goswami, 1998. "Corruption, Tax Evasion and the Laffer Curve," Departmental Working Papers 199604, Rutgers University, Department of Economics.
  2. Smimou, K., 2014. "International portfolio choice and political instability risk: A multi-objective approach," European Journal of Operational Research, Elsevier, vol. 234(2), pages 546-560.
  3. Nicolas Jacquemet, 2005. "Corruption as Betrayal : Experimental Evidence on Corruption Under Delegation," Working Papers 0506, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  4. Bac, Mehmet, 1998. "The Scope, Timing, and Type of Corruption," International Review of Law and Economics, Elsevier, vol. 18(1), pages 101-120, March.
  5. 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.
  6. Mehmet Bac & Parimal Kanti Bag, 2000. "Law Enforcement Costs and Legal Presumptions," Econometric Society World Congress 2000 Contributed Papers 0194, Econometric Society.
  7. Goel, Rajeev K. & Nelson, Michael A., 2007. "Are corrupt acts contagious?: Evidence from the United States," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 839-850.
  8. Mehmet Bac & Serkan Kucuksenel, 2006. "Two Types of Collusion in a Model of Hierarchical Agency," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(2), pages 262-276, June.
  9. Hainz, Christa & Boerner, Kira, 2005. "The Political Economy of Corruption and and the Role of Financial Institutions," Proceedings of the German Development Economics Conference, Kiel 2005 6, Verein für Socialpolitik, Research Committee Development Economics.

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