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The Microeconomics of Corruption. A Review of Thirty Years of Research

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

Abstract

We review microeconomic research on corruption from the last thirty years. We start by analyzing the seminal models of corruption built on three-tier, delegation models. Then, go into more details of 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 García-Montalvo, 2016. "The Microeconomics of Corruption. A Review of Thirty Years of Research," Working Papers 908, Barcelona School of Economics.
  • Handle: RePEc:bge:wpaper:908
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    Cited by:

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    2. Montalvo, José G. & Piolatto, Amedeo & Raya, Josep, 2020. "Transaction-tax evasion in the housing market," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    3. Pablo Zárate, 2021. "Signaling corruption through conspicuous consumption," Young Researchers Working Papers 2, Universidad de San Andres, Departamento de Economia, revised Oct 2022.
    4. De Chiara, Alessandro & Livio, Luca & Ponce, Jorge, 2018. "Flexible and mandatory banking supervision," Journal of Financial Stability, Elsevier, vol. 34(C), pages 86-104.
    5. Jun Hu, 2021. "Asymmetric punishment, Leniency and Harassment Bribes in China: a selective survey," Working Papers hal-03119491, HAL.
    6. Anguera-Torrell, Oriol, 2020. "Entrepreneurship, trust and corruption," European Journal of Political Economy, Elsevier, vol. 65(C).
    7. Raffaella Barone & Donato Masciandaro & Friedrich Schneider, 2022. "Corruption and money laundering: You scratch my back, i’ll scratch yours," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 318-342, February.

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    More about this item

    Keywords

    corruption; bribes; deterrence; Bureaucracy; competition; game theory; Mechanism Design;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • 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

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