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Corruption, Supervision, and the Structure of Hierarchies

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  • Bac, Mehmet

Abstract

This article studies the relation between the structure of monitoring hierarchies and corruption, that is, the expected number of bribed members. The model allows for internal corruption, a form of collusion eliminating accountability (monitoring) in the hierarchy. It is shown that the number of subordinates in a corruption-minimizing hierarchy is constrained by the prospect of internal corruption and/or monitoring costs. This constraint may generate structurally independent segments. When its members are provided with the same incentive system, the middle rank of a supervision chain displays the lowest external corruption, but there is more scope for internal corruption in the upper part than in the lower part. Copyright 1996 by Oxford University Press.

Suggested Citation

  • Bac, Mehmet, 1996. "Corruption, Supervision, and the Structure of Hierarchies," Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(2), pages 277-298, October.
  • Handle: RePEc:oup:jleorg:v:12:y:1996:i:2:p:277-98
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    Cited by:

    1. Cuervo-Cazurra, Alvaro, 2016. "Corruption in international business," Journal of World Business, Elsevier, vol. 51(1), pages 35-49.
    2. Sanyal, Amal & Gang, Ira N & Goswami, Omkar, 2000. "Corruption, Tax Evasion and the Laffer Curve," Public Choice, Springer, vol. 105(1-2), pages 61-78, October.
    3. Nicolas Jacquemet, 2005. "Corruption as Betrayal : Experimental Evidence on Corruption Under Delegation," Working Papers 0506, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    4. Abbink, Klaus, 2004. "Staff rotation as an anti-corruption policy: an experimental study," European Journal of Political Economy, Elsevier, vol. 20(4), pages 887-906, November.
    5. repec:eee:jeborg:v:145:y:2018:i:c:p:232-248 is not listed on IDEAS
    6. Mehmet Bac & Serkan Kucuksenel, 2006. "Two Types of Collusion in a Model of Hierarchical Agency," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(2), pages 262-276, June.
    7. Hainz, Christa & Boerner, Kira, 2005. "The Political Economy of Corruption and and the Role of Financial Institutions," Proceedings of the German Development Economics Conference, Kiel 2005 6, Verein für Socialpolitik, Research Committee Development Economics.
    8. Mengel, Friederike, 2014. "Learning by (limited) forward looking players," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 59-77.
    9. Kemal Saygili & Serkan Kucuksenel, 2018. "Other-Regarding Preferences in Organizational Hierarchies," ERC Working Papers 1802, ERC - Economic Research Center, Middle East Technical University, revised Feb 2018.
    10. Goel, Rajeev K. & Nelson, Michael A., 2007. "Are corrupt acts contagious?: Evidence from the United States," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 839-850.
    11. Sanyal, Amal, 2000. "Audit Hierarchy in a Corrupt Tax Administration," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 364-378, June.
    12. Kira Boerner & Christa Hainz, 2009. "The political economy of corruption and the role of economic opportunities," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 213-240, April.
    13. Valerie Rosenblatt, 2012. "Hierarchies, Power Inequalities, and Organizational Corruption," Journal of Business Ethics, Springer, vol. 111(2), pages 237-251, December.
    14. Mehmet Bac & Parimal Kanti Bag, 2000. "Law Enforcement Costs and Legal Presumptions," Econometric Society World Congress 2000 Contributed Papers 0194, Econometric Society.
    15. Smimou, K., 2014. "International portfolio choice and political instability risk: A multi-objective approach," European Journal of Operational Research, Elsevier, vol. 234(2), pages 546-560.
    16. Bac, Mehmet, 1998. "The Scope, Timing, and Type of Corruption," International Review of Law and Economics, Elsevier, vol. 18(1), pages 101-120, March.
    17. Bag, Parimal Kanti, 1997. "Controlling Corruption in Hierarchies," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 322-344, December.
    18. P. Giannoccolo & M. Lisciandra, 2014. "Political Corruption and Minority Capture," Working Papers wp967, Dipartimento Scienze Economiche, Universita' di Bologna.

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