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The microeconomics of corruption

In: Handbook of Game Theory and Industrial Organization, Volume II

Author

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  • Roberto Burguet
  • Juan-José Ganuza
  • José G Montalvo

Abstract

We review microeconomic research on corruption from the last 30 years. We start by analyzing the seminal models of corruption built on three-tier, delegation models. Then, we go into more detail on the context of corrupt deals, and discuss the main economic factors that affect corruption. We discuss incentives and compensation in bureaucracies, and the interplay of market and bureaucratic structure. Competition and contract design will also be reviewed in relation to procurement under corruptible agents. After reviewing the theoretical contributions, we turn to the empirical evidence. We begin discussing measurement issues, and then move to the analysis of the empirical evidence relative to the theoretical models discussed in previous sections. Finally, we cover several anti-corruption mechanisms proposed in the literature and discuss their relative merits as devices to control or eliminate illegal activities.

Suggested Citation

  • Roberto Burguet & Juan-José Ganuza & José G Montalvo, 2018. "The microeconomics of corruption," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume II, chapter 16, pages 420-450, Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:17978_16
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    Citations

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    Cited by:

    1. Alexander Henke & Fahad Khalil & Jacques Lawarree, 2022. "Honest agents in a corrupt equilibrium," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 762-783, August.
    2. Jiang, Shuguang & Wei, Qian, 2022. "Confucian culture, moral reminder, and soft corruption," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    3. Andrew Samuel & Ajit Mishra, 2022. "Does it matter who extorts? Extortion by competent and incompetent enforcers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 328-344, July.
    4. He, Haoran & Jiang, Shuguang, 2020. "Partisan culture, identity and corruption: An experiment based on the Chinese Communist Party," China Economic Review, Elsevier, vol. 60(C).

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    Keywords

    Economics and Finance;

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