Corruption in Law Enforcement Agen-cies and Optimal Enforcement of Law

The article is devoted to answering the question: is it possible to ensure optimal law enforcement from the point of view of public wel-fare in the presence of non-systemic corruption in law enforcement agencies? Unlike a number of previous papers (see, in particular: [Bowles and Garoupa, 1997; Chang and al., 2000]), in our model, there is no differentiation of police officers either by the costs of participating in corruption transactions, or by any other criteria. Therefore, all police officers react to the incentives created by the principal in the same way: if one po-lice officer, under the given conditions, prefers corruption to honest behavior, then all the rest will choose the same. In our opinion, the greater realism of this assumption in comparison with the alternative one is due to the mechanism of adverse se-lection in the labor market and the phenomenon of self-reproduction of corruption discussed in detail in the literature (see, in particular: [Andvig and Moene, 1990; Tirole, 1996, Bardhan, 1997]). Another key assumption of the article is the information that the agent (policeman) communicates to the princi-pal is hard information. In other words, if he has accurately established the event of the crime and the identity of the offender, he can either tell the principal the truth, or he cannot report anything. A police officer does not have the opportunity to report a crime that did not actually occur or to accuse an obviously innocent person of committing a crime. This paper analyzes various schemes for the payment of remuneration by the principal to law enforcement officers and their reaction to the incentives created in this way. It is proved that if, in the absence of ad-ditional remuneration for law enforcement officers and with the pay-ment of effective wages, it is impossible to achieve the first best result, then when the principal establishes additional remuneration for each solved crime at a level at which the optimal strategy for law enforce-ment officers changes from corruption to fair, it is perhaps even with the spread of corruption in law enforcement agencies.