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Mackerels in the moonlight. A model of corrupt politicians

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  • Haldun Evrenk

Abstract

This paper examines causes of the persistence of corruption among elected politicians in democracies. We study a theoretical model of competition between two candidates who differ both in ability and popularity in a probabilistic voting setup. Each candidate proposes a tax rate and a public good level. The elected candidate's ability determines the cost of producing the public good. The budget constraint implies that taxes collected must equal the sum of public good cost and the amount stolen by the elected politician. We solve for the tax rates chosen by the candidates and how much each candidate chooses to steal depending on his ability and popularity. We, then, analyze the effects of various commonly discussed reforms as potential ways of deterring political corruption. We identify conditions under which (i) imposing tax rate limits, (ii) increasing compensation of elected politicians, and (iii) raising legal penalties for corruption, will increase corruption and/or reduce the social welfare. Under certain conditions, the reforms that will reduce corruption will not be supported by either corrupt or honest politicians

Suggested Citation

  • Haldun Evrenk, 2004. "Mackerels in the moonlight. A model of corrupt politicians," Econometric Society 2004 North American Summer Meetings 501, Econometric Society.
    • Handle: RePEc:ecm:nasm04:501
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    File URL: http://repec.org/esNASM04/up.17303.1075568974.pdf
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    References listed on IDEAS

    as
    1. Michele Polo, "undated". "Electoral competition and political rents," Working Papers 144, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    2. Caselli, Francesco & Morelli, Massimo, 2004. "Bad politicians," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 759-782, March.
    3. AlÌcia Adserý, 2003. "Are You Being Served? Political Accountability and Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 445-490, October.
    4. Torsten Persson & Guido Tabellini & Francesco Trebbi, 2003. "Electoral Rules and Corruption," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 958-989, June.
    5. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    6. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, May.
    7. Evrenk, Haldun, 2009. "An exercise in political economy of tax reform," Economics Letters, Elsevier, vol. 105(1), pages 81-82, October.
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    More about this item

    Keywords

    Probabilistic voting; corruption; constitutional constraints; reform;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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