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Ex-ante and Ex-post Corruption

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  • Alberto Motta

    () (University di Padova)

Abstract

This paper studies the optimal compensation policy for a corruptible inspector, in charged with monitoring evasion from a taxpayer. Namely, I discuss how the optimal compensation policy varies according to the timing of collusion, which is allowed to occur either before or after inspection takes place. This paper shows that increasing the bonus rate is a better policy than increasing the penalty rate when corruption occurs after inspection. The contrary is true when the collusive agreement is established before the inspection. Implications for privatization of law enforcement are analyzed.

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Bibliographic Info

Paper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0094.

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Length: 30 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:pad:wpaper:0094

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Cited by:
  1. Andrew Samuel & Aaron Lowen, 2010. "Bribery and inspection technology," Economics of Governance, Springer, vol. 11(4), pages 333-350, November.
  2. Samuel, Andrew, 2009. "Preemptive collusion among corruptible law enforcers," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 441-450, August.

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