The Optimal Combination of Corruption Reforms: Is a Comprehensive Approach a Good Idea?
The earlier work on corruption reform often argues that a broader set of reforms be implemented. The main purpose of the paper is to examine the validity of this argument by formalizing the analysis of the interactions of procurement reforms. The model not only supports well-known interaction effects but also shows a new interaction effect: even if two reforms are substitute, they may be complementary if combined further with another reform. It also shows that it is optimal to carry out a reform alone in certain conditions although it is optimal to combine all reforms in other conditions. More specifically, we examine the single and combination effects of different kinds of possible reform policies: delegation (delegating authority on contracting with the firm to the agency), administrative reforms (improving the agency's monitoring ability), incentive reforms (introducing incentive contracts with the agency) and legal reforms (enhancing legal systems). The following is our results: i) Incentive reforms are anti-corruption policies while administrative reforms and delegation are corruption-accommodating policies, if they are implemented singly. ii) Incentive reforms are complementary to delegation but substitute with administrative reforms. iii) The substitution effect between incentive and administrative reforms disappears if they are further combined with delegation. It follows that if delegation is not costly to implement, it is optimal to combine all reform policies. On the other hand, if delegation is too costly to implement and administrative reforms are not costly, it is optimal to implement them singly. This paper has some implications for the optimal sequence of reforms. It can also account for the persistence and deepening of corruption in some societies over time even if those societies continue to implement optimal reform policy (combination).
|Date of creation:||01 Aug 2000|
|Date of revision:|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-41, January.
- Spiller, Pablo T, 1996. "Institutions and Commitment," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 421-52.
- Melamad, N. & Mookherjee, D. & Reichelstein, S., 1996.
"Contract Complexity, Incentives and the Value of Delegation,"
70, Boston University - Industry Studies Programme.
- Nahum Melumad & Dilip Mookherjee & Stefan Reichelstein, 1997. "Contract Complexity, Incentives, and the Value of Delegation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 257-289, 06.
- Nahum Melamad & Dilip Mookherjee & Stefan Reichelstein, 1996. "Contract Complexity, Incentives and the Value of Delegation," Papers 0070, Boston University - Industry Studies Programme.
- Mookherjee, Dilip & Png, I P L, 1995. "Corruptible Law Enforcers: How Should They Be Compensated?," Economic Journal, Royal Economic Society, vol. 105(428), pages 145-59, January.
- Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-92, May.
- Jean-Jacques Laffont & Jean Tirole, 1988.
"The Politics of Government Decision-Making: A Theory of Regulatory Capture,"
506, Massachusetts Institute of Technology (MIT), Department of Economics.
- Laffont, Jean-Jacques & Tirole, Jean, 1991. "The Politics of Government Decision-Making: A Theory of Regulatory Capture," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1089-127, November.
- Jean-Jacques LAFFONT & Jean TIROLE, 1990. "The Politics of Government Decision-Making : a Theory of Regulatory Capture," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9004, Université de Lausanne, Faculté des HEC, DEEP.
- Ariane Lambert-Mogiliansky, 1998. "On optimality of illegal collusion in contracts," Review of Economic Design, Springer, vol. 3(4), pages 303-328.
- Alberto Ades & Rafael Di Tella, 1997. "The New Economics of Corruption: a Survey and Some New Results," Political Studies, Political Studies Association, vol. 45(3), pages 496-515.
- Kofman, F. & Lawarree, J., 1993.
"On the Optimality of Allowing Collusion,"
Discussion Papers in Economics at the University of Washington
93-02, Department of Economics at the University of Washington.
- Mathias Dewatripont & Gérard Roland, 1997.
"Transition as a process of large-scale institutional change,"
ULB Institutional Repository
2013/9659, ULB -- Universite Libre de Bruxelles.
- Mathias Dewatripont & Gérard Roland, 1996. "Transition as a process of large-scale institutional change," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 1-30, 05.
- Klitgaard, R., 1995. "Institutional Adjustment and Adjusting to Institutions," World Bank - Discussion Papers 303, World Bank.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 889-906, August.
- Nahum D. Melumad & Dilip Mookherjee, 1989. "Delegation as Commitment: The Case of Income Tax Audits," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 139-163, Summer.
- Strausz, R.G., 1995.
"Collusion and Renegotiation in a Principal-Supervisor-Agent Relationship,"
1995-48, Tilburg University, Center for Economic Research.
- Strausz, Roland, 1997. " Collusion and Renegotiation in a Principal-Supervisor-Agent Relationship," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(4), pages 497-518, December.
- Laffont, Jean-Jacques & N'Guessan, Tchetche, 1999. "Competition and corruption in an agency relationship," Journal of Development Economics, Elsevier, vol. 60(2), pages 271-295, December.
When requesting a correction, please mention this item's handle: RePEc:ecm:wc2000:1335. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.