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Why Is Corruption a Problem of the State?

Author

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  • Tomáš Otáhal

Abstract

Economic theories of the last decades provide analytical framework within which we can explain institutional conditions for corrupt action. Specialists making economic policy recommendations to resolve this problem use several approaches, the most dominant of which are rent seeking and agency theories. In this paper, I explain economic policy recommendations that stem out of both approaches. I argue that scholars suggesting these recommendations within these two frameworks do not understand each other because of different assumptions they make. More specifically, I show that two sets of policy recommendations presented here are based on the particular system of property rights assumed within each theory. In this example, I show why corruption is a problem of the state rather than the market.

Suggested Citation

  • Tomáš Otáhal, 2007. "Why Is Corruption a Problem of the State?," Prague Economic Papers, Prague University of Economics and Business, vol. 2007(2), pages 165-179.
    • Handle: RePEc:prg:jnlpep:v:2007:y:2007:i:2:id:304:p:165-179
    DOI: 10.18267/j.pep.304
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    Citations

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    Cited by:

    1. Tomas Otahal, 2011. "Rent-Seeking Origins of Central Banks: The Case of the Federal Reserve System," MENDELU Working Papers in Business and Economics 2011-08, Mendel University in Brno, Faculty of Business and Economics.
    2. Tudorel Andrei & Ani Matei & Stelian Stancu & Bogdan Oancea, 2009. "Some notes about decentralization process implications on public administration corruption in romania," Prague Economic Papers, Prague University of Economics and Business, vol. 2009(1), pages 26-37.
    3. Petr Wawrosz, 2022. "How Corruption Is and Should Be Investigated by Economic Theory," Economies, MDPI, vol. 10(12), pages 1-23, December.
    4. Vladan Holcner & Marek Sedlačik & Jaroslav Michálek & Jakub Odehnal, 2014. "Transaction Costs in International Armaments Cooperation," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(2), pages 217-232.
    5. Ladislava Grochova & Tomas Otahal, 2011. "Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics," MENDELU Working Papers in Business and Economics 2011-13, Mendel University in Brno, Faculty of Business and Economics.
    6. Tomáš Otáhal, 2014. "Mises, Hayek and Corruption," Journal of Business Ethics, Springer, vol. 119(3), pages 399-404, February.
    7. Ladislava Grochová & Tomáš Otáhal, 2010. "Podnikání a ekonomický rozvoj: jaký je rozdíl mezi neorakouskou a novou institucionální ekonomií? [Entrepreneurship and Economic Development: What is the Difference Between Austrian and New Institu," Politická ekonomie, Prague University of Economics and Business, vol. 2010(5), pages 623-640.
    8. Tomáš Otáhal, 2009. "Problém zastoupení v nové institucionální ekonomii [The Agency Problem in New Institutional Economics]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(5), pages 677-695.

    More about this item

    Keywords

    competition; corruption; agent; agency theory; bribery; contract; comparative analysis; principal; rent seeking;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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