Mackerels in the moonlight. A model of corrupt politicians
AbstractThis paper examines causes of the persistence of corruption among elected politicians in democracies. We study a theoretical model of competition between two candidates who differ both in ability and popularity in a probabilistic voting setup. Each candidate proposes a tax rate and a public good level. The elected candidate's ability determines the cost of producing the public good. The budget constraint implies that taxes collected must equal the sum of public good cost and the amount stolen by the elected politician. We solve for the tax rates chosen by the candidates and how much each candidate chooses to steal depending on his ability and popularity. We, then, analyze the effects of various commonly discussed reforms as potential ways of deterring political corruption. We identify conditions under which (i) imposing tax rate limits, (ii) increasing compensation of elected politicians, and (iii) raising legal penalties for corruption, will increase corruption and/or reduce the social welfare. Under certain conditions, the reforms that will reduce corruption will not be supported by either corrupt or honest politicians
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 501.
Date of creation: 11 Aug 2004
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Probabilistic voting; corruption; constitutional constraints; reform;
Find related papers by JEL classification:
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- H40 - Public Economics - - Publicly Provided Goods - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-30 (All new papers)
- NEP-LAW-2004-10-30 (Law & Economics)
- NEP-POL-2004-10-30 (Positive Political Economics)
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