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Petty corruption: A game-theoretic approach

Author

Listed:
  • Ariane Lambert-Mogiliansky
  • Mukul Majumdar
  • Roy Radner

Abstract

The paper explores a game-theoretic model of petty corruption involving a sequence of entrepreneurs and a track of bureaucrats. Each entrepreneur's project is approved if and only if it is cleared by each bureaucrat. The project value is stochastic; its value is observed only by the entrepreneur, but its distribution is common knowledge. Each bureaucrat clears the project only if a bribe is paid. The bribe for qualified projects ("extortion") and unqualified projects ("capture") may differ. We identify the nature and welfare implications of different types of equilibria under appropriate technical assumptions on the structure of the game.
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Suggested Citation

  • Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2008. "Petty corruption: A game-theoretic approach," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 273-297.
  • Handle: RePEc:bla:ijethy:v:4:y:2008:i:2:p:273-297
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1742-7363.2008.00078.x
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    References listed on IDEAS

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    1. Kimberly Ann Elliott, 1997. "Corruption and the Global Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 12.
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    Citations

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    Cited by:

    1. Krishnendu Ghosh DASTIDAR & YANO Makoto, 2017. "Corruption, Market Quality and Entry Deterrence in Emerging Economies," Discussion papers 17010, Research Institute of Economy, Trade and Industry (RIETI).
    2. Drugov, Mikhail, 2010. "Competition in bureaucracy and corruption," Journal of Development Economics, Elsevier, vol. 92(2), pages 107-114, July.
    3. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2009. "Strategic analysis of petty corruption with an intermediary," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 45-57, April.
    4. Stamatios Katsikas & Vassili Kolokoltsov & Wei Yang, 2016. "Evolutionary Inspection and Corruption Games," Games, MDPI, Open Access Journal, vol. 7(4), pages 1-25, October.
    5. Seung Yoo, 2008. "Petty corruption," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 267-280, November.
    6. Lambert-Mogiliansky, Ariane & Majumdar, Mukul & Radner, Roy, 2007. "Strategic analysis of petty corruption: Entrepreneurs and bureaucrats," Journal of Development Economics, Elsevier, vol. 83(2), pages 351-367, July.
    7. Krishna Athreya & Monisankar Bishnu, 2010. "On the efficiency of ‘single window’," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(2), pages 207-226, May.
    8. V. N. Kolokoltsov & O. A. Malafeyev, 2017. "Mean-Field-Game Model of Corruption," Dynamic Games and Applications, Springer, vol. 7(1), pages 34-47, March.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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