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Mackerels in the moonlight. A model of corrupt politicians

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  • Haldun Evrenk

Abstract

This 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 Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 501.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:501

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Keywords: Probabilistic voting; corruption; constitutional constraints; reform;

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  1. Persson, Torsten & Tabellini, Guido & Trebbi, Francesco, 2001. "Electoral Rules and Corruption," CEPR Discussion Papers 2741, C.E.P.R. Discussion Papers.
  2. Brennan,Geoffrey & Buchanan,James M., 1980. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521233293, Fall.
  3. AlÌcia Adserý, 2003. "Are You Being Served? Political Accountability and Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(2), pages 445-490, October.
  4. Francesco Caselli & Massimo Morelli, 2001. "Bad Politicians," NBER Working Papers 8532, National Bureau of Economic Research, Inc.
  5. Michele Polo, . "Electoral competition and political rents," Working Papers 144, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  6. Evrenk, Haldun, 2009. "An exercise in political economy of tax reform," Economics Letters, Elsevier, vol. 105(1), pages 81-82, October.
  7. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
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