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Decentralized Bribery and Market Participation

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  • Popov, Sergey V.

Abstract

I propose a bribery model with decentralized bureaucratic decisionmaking. There are multiple stable equilibria: high levels of bribery reduce the economy's productivity due to suppression of small businesses, and reduces the total graft even though it might increase the individual bribe amount. The coordinated deviation to a better participation equilibrium is impossible due to decentralization. Anti-corruption efforts, even temporary, might be useful if they invite better participation.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43829.

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Date of creation: 26 Sep 2012
Date of revision: 16 Jan 2013
Handle: RePEc:pra:mprapa:43829

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Keywords: corruption; bribery; decentralization;

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  2. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
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  17. Vito Tanzi & Hamid Reza Davoodi, 1997. "Corruption, Public Investment, and Growth," IMF Working Papers 97/139, International Monetary Fund.
  18. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-23, October.
  19. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  20. Hillman, Arye L. & Katz, Eliakim, 1987. "Hierarchical structure and the social costs of bribes and transfers," Journal of Public Economics, Elsevier, vol. 34(2), pages 129-142, November.
  21. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
  22. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
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