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Strategic Analysis of Petty Corruption with an Intermediary

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  • Lambert-Mogiliansky, Ariane

    (Paris School of Economics)

  • Majumdar, Mukul

    (Cornell University)

  • Radner, Roy

    (New York University)

Abstract

This note reports part of a larger study of "petty corruption" by government bureaucrats in the process of approving new business projects. Each bureaucrat may demand a bribe as a condition of approval. Entrepreneurs use the services of an intermediary who, for a fee, undertakes to obtain all of the required approvals. In a dynamic game model we investigate (1) the multiplicity of equilibria, (2) the equilibria that are "socially efficient," and (3) the equilibria that maximize the total expected bureaucrats' bribe income. We compare these results with those for the case in which entrepreneurs apply directly to the bureaucrats.

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Bibliographic Info

Paper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number 08-11.

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Date of creation: Dec 2008
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Handle: RePEc:ecl:corcae:08-11

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References

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  1. Leonid Hurwicz, 2008. "But Who Will Guard the Guardians?," American Economic Review, American Economic Association, American Economic Association, vol. 98(3), pages 577-85, June.
  2. Lambert-Mogiliansky, Ariane & Majudar, Mukul & Radner, Roy, 2008. "Petty Corruption: A Game-Theoretic Approach," Working Papers, Cornell University, Center for Analytic Economics 08-09, Cornell University, Center for Analytic Economics.
  3. Roy Radner & Ariane Lambert-Mogiliansky & Makul Majumdar, 2004. "Strategic Analysis of Petty Corruption: Entrepreneurs and Bureaucrats," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 04-22, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521872751.
  5. Hasker, Kevin & Okten, Cagla, 2008. "Intermediaries and corruption," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 67(1), pages 103-115, July.
  6. Güzin Bayar, 2005. "The role of intermediaries in corruption," Public Choice, Springer, Springer, vol. 122(3), pages 277-298, March.
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Cited by:
  1. repec:hal:wpaper:halshs-00672963 is not listed on IDEAS
  2. Frédéric Koessler & Ariane Lambert-Mogiliansky, 2012. "Optimal Extortion and Political Risk Insurance," PSE Working Papers halshs-00672963, HAL.
  3. Mishra, Ajit & Samuel, Andrew, 2013. "Corruption and Hold-Up : The Role of Intermediaries," Department of Economics Working Papers, University of Bath, Department of Economics 37907, University of Bath, Department of Economics.
  4. Graf Lambsdorff, Johann, 2010. "Deterrence and constrained enforcement: Alternative regimes to deal with bribery," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-60-10, University of Passau, Faculty of Business and Economics.
  5. Gautam Bose, 2010. "Aspects of Bureaucratic Corruption," Discussion Papers, School of Economics, The University of New South Wales 2010-14, School of Economics, The University of New South Wales.

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