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A Duopoly Model of Political Agency with Applications to Anti-Corruption Reform


  • Evrenk Haldun

    () (Suffolk University)


Using a theoretical model of political competition between two candidates who could differ in their (unverifiable) ability to produce public good, popularity, and ethics, I study the effectiveness of three commonly discussed anti-corruption reforms (higher salaries, higher penalties, and constitutional constraints on fiscal policy). In the model, each candidate proposes an income tax rate and a public good level. The difference between the collected taxes and the cost of public good is stolen by the elected politician. The voting decision is probabilistic. I show that under certain conditions each reform could increase the level of corruption or reduce the voter's welfare through other channels.

Suggested Citation

  • Evrenk Haldun, 2009. "A Duopoly Model of Political Agency with Applications to Anti-Corruption Reform," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-38, December.
  • Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:40

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    References listed on IDEAS

    1. Evrenk, Haldun, 2008. "On the (In)Effectiveness of Some Commonly Proposed Anti-Corruption Reforms," Working Papers 2008-5, Suffolk University, Department of Economics.
    2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    3. Roger B. Myerson, 2006. "Bipolar Multicandidate Elections with Corruption," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 727-742, December.
    4. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
    5. Caselli, Francesco & Morelli, Massimo, 2004. "Bad politicians," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 759-782, March.
    6. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December.
      • Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    7. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    8. Banks, Jeffrey S. & Sundaram, Rangarajan K., 1998. "Optimal Retention in Agency Problems," Journal of Economic Theory, Elsevier, vol. 82(2), pages 293-323, October.
    9. John Douglas Wilson, 1989. "An Optimal Tax Treatment Of Leviathan," Economics and Politics, Wiley Blackwell, vol. 1(2), pages 97-117, July.
    10. George Warskett & Stanley Winer & Walter Hettich, 1998. "The Complexity of Tax Structure in Competitive Political Systems," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(2), pages 123-151, May.
    11. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    12. Evrenk, Haldun, 2008. "Mackerels in the Moonlight: A Duopoly Model of Political Agency," Working Papers 2008-4, Suffolk University, Department of Economics.
    13. Szentes, Balazs & Rosenthal, Robert W., 2003. "Three-object two-bidder simultaneous auctions: chopsticks and tetrahedra," Games and Economic Behavior, Elsevier, vol. 44(1), pages 114-133, July.
    14. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
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    Cited by:

    1. Evrenk, Haldun, 2011. "Why a clean politician supports dirty politics: A game-theoretical explanation for the persistence of political corruption," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 498-510.

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