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The Pitfalls of a Partially Honest Bureaucracy: Bribery, Inefficiency, and Bureaucratic Delay

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  • Chris Ahlin

    ()
    (Department of Economics, Vanderbilt University)

  • Pinaki Bose

    ()
    (Department of Economics, Unviersity of Memphis)

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    Abstract

    Bribery, it has been argued, allocates resources efficiently. We show that this conclusion need not hold in a dynamic extension of a simple static model in which it does. When permits are awarded over time and applicants can reapply, a partially honest bureaucracy results in inefficiency. This can take the form of both misallocation and bureaucratic delay, both of which are strategic maneuvers by dishonest bureaucrats to increase bribery income. Efficiency is a non-monotonic function of the fraction of bureaucrats that are honest. Consequently, small differences in monitoring costs may lead to very different optimal levels of corruption.

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    File URL: http://www.accessecon.com/pubs/VUECON/vu02-w24.pdf
    File Function: First version, 2002
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    Bibliographic Info

    Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0224.

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    Date of creation: Dec 2002
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    Handle: RePEc:van:wpaper:0224

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    Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

    Related research

    Keywords: Bribery; allocation efficiency; bureaucratic delay; corruption;

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    1. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
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