Corruption, Extortion, and the Boundaries of the Law
We consider a set-up in which a principal must decide whether or not to legalise a socially undesirable activity. The law is enforced by a monitor who may be bribed to conceal evidence of the offence and who may also engage in extortionary practices. The principal only declares the activity illegal if the activity if "very harmful" and if the private benefit (received by the agent if she breaks the law) is "high". We present comparative static results and highlight policy implications.
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- Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2005.
"Organized crime, corruption and punishment,"
Journal of Public Economics,
Elsevier, vol. 89(9-10), pages 1639-1663, September.
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- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712. Full references (including those not matched with items on IDEAS)
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