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Strategic analysis of influence peddling

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  • Mukul Majumdar

  • Seung Yoo

Abstract

This paper analyzes “influence peddling” in a model that portrays interactions involving human capital transfer and collusion-building, in which each government official regulates multiple firms simultaneously. We show that there exists a collusion maximizing equilibrium between a sequence of “qualified” regulators and a firm such that the qualified bureaucrat manipulates regulation rates for two firms by regulating the colluding firm leniently for the maximized sum of their payoffs, but regulating the non-colluding firm stringently for the signaling in order to “compensate” for the lenient regulatory stance taken toward the colluding firm. Copyright Springer-Verlag 2012

Suggested Citation

  • Mukul Majumdar & Seung Yoo, 2012. "Strategic analysis of influence peddling," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(4), pages 737-762, November.
    • Handle: RePEc:spr:jogath:v:41:y:2012:i:4:p:737-762
    DOI: 10.1007/s00182-012-0340-z
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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