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Decentralized Bribery and Market Participation

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  • Sergey V. Popov

Abstract

I propose a bribery model that examines decentralized bureaucratic decision-making. There are multiple stable equilibria. High levels of bribery reduce an economy's productivity because corruption suppresses small business, and reduces the total graft, even though the size of an individual bribe might increase. Decentralization prevents movement towards a Pareto-dominant equilibrium. Anticorruption efforts, even temporary ones, might be useful to improve participation, if they lower the bribe levels demanded and thus encourage small businesses to participate.

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  • Sergey V. Popov, 2015. "Decentralized Bribery and Market Participation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(1), pages 108-125, January.
    • Handle: RePEc:bla:scandj:v:117:y:2015:i:1:p:108-125
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    File URL: http://hdl.handle.net/10.1111/sjoe.12081
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    Cited by:

    1. Sergey V. Popov, 2016. "On Basu's Proposal: Fines Affect Bribes," Economics Working Papers 16-04, Queen's Management School, Queen's University Belfast.
    2. Dmitriy Knyazev, 2023. "How to fight corruption: Carrots and sticks," Economic Inquiry, Western Economic Association International, vol. 61(2), pages 413-429, April.
    3. Evgeny V. POPOV, 2019. "Business institutions of economic activity digitalization," Upravlenets, Ural State University of Economics, vol. 10(2), pages 2-10, May.
    4. Kouramoudou Keita & Hannu Laurila, 2016. "Efficient Corruption? Testing the hypothesis in African countries," Working Papers 1699, Tampere University, Faculty of Management and Business, Economics.
    5. Kimiko Terai & Amihai Glazer, 2019. "Why principals tolerate biases of inaccurate agents," Economics and Politics, Wiley Blackwell, vol. 31(1), pages 97-111, March.

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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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