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On corruption, bribes and the exchange of favors

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  • Rodrigues-Neto, José A.

Abstract

This paper investigates how the availability of alternative forms of bribe payments, on top of money, may facilitate corruption. There are two bribe payment technologies and a Corruptor and a Receiver must agree on the value and on the technology of the bribe. The paper infers which form of payment can be used by analyzing probabilities of punishment, bargaining powers of agents, and relative efficiency of the two different technologies. By assumption, monetary payments have distinct efficiency than do non-monetary favors. If the Receiver has a sufficiently high utility for payments using a particular technology, then only bribes paid via this technology are feasible. There is also a range of intermediate cases where monetary bribery is used if and only if the relative bargaining power of the Receiver is sufficiently large compared to that of the Corruptor.

Suggested Citation

  • Rodrigues-Neto, José A., 2014. "On corruption, bribes and the exchange of favors," Economic Modelling, Elsevier, vol. 38(C), pages 152-162.
  • Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:152-162
    DOI: 10.1016/j.econmod.2013.12.010
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    References listed on IDEAS

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    More about this item

    Keywords

    Bribe; Corruption; Favor; Money; Sex;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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