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Intermediated corruption under asymmetric punishment

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  • Hu, Lin
  • Oak, Mandar

Abstract

Anecdotal evidence suggests that intermediaries who help citizens and businesses navigate the complexities of government regulatory procedures can also facilitate bribery. Moreover, it has been argued that traditional methods of detecting bribery may be ineffective in the presence of intermediaries. This paper investigates whether asymmetric punishment (viz., punishing bribe taking, but not giving) can reduce bribery when both intermediated as well direct corruption are possible and the complexity of the regulatory process is endogenous. We show that if asymmetric punishment can induce whistle blowing, then a switch from symmetric to asymmetric punishment can result in fewer bribery transactions, a reduction in regulatory complexity, and an increase in clients' gain from regulatory approvals.

Suggested Citation

  • Hu, Lin & Oak, Mandar, 2023. "Intermediated corruption under asymmetric punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 490-499.
    • Handle: RePEc:eee:jeborg:v:215:y:2023:i:c:p:490-499
    DOI: 10.1016/j.jebo.2023.09.032
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    More about this item

    Keywords

    Corruption; Asymmetric punishment; Intermediary; Red tape;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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