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Strategic analysis of petty corruption with an intermediary

Author

Listed:
  • Ariane Lambert-Mogiliansky

    (PJSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Mukul Majumdar

    (Economics Department - Cornell University - Cornell University)

  • Roy Radner

    (Stern School of Business - New York University [New York])

Abstract

This note reports part of a larger study of "petty corruption" by government bureaucrats in the process of approving new business projects. Each bureaucrat may demand a bribe as a condition of approval. Entrepreneurs use the services of an intermediary who, for a fee, undertakes to obtain all of the required approvals. In a dynamic game model we investigate (1) the multiplicity of equilibria, (2) the equilibria that are "socially efficient", and (3) the equilibria that maximize the total expected bureaucrats' bribe income. We compare these results with those for the case in which entrepreneurs apply directly to the bureaucrats.

Suggested Citation

  • Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2009. "Strategic analysis of petty corruption with an intermediary," Post-Print halshs-00754385, HAL.
  • Handle: RePEc:hal:journl:halshs-00754385
    DOI: 10.1007/s10058-008-0068-1
    Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754385
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    References listed on IDEAS

    as
    1. Leonid Hurwicz, 2008. "But Who Will Guard the Guardians?," American Economic Review, American Economic Association, vol. 98(3), pages 577-585, June.
    2. Lambert-Mogiliansky, Ariane & Majumdar, Mukul & Radner, Roy, 2007. "Strategic analysis of petty corruption: Entrepreneurs and bureaucrats," Journal of Development Economics, Elsevier, vol. 83(2), pages 351-367, July.
    3. Hasker, Kevin & Okten, Cagla, 2008. "Intermediaries and corruption," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 103-115, July.
    4. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2008. "Petty corruption: A game-theoretic approach," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 273-297.
    5. Güzin Bayar, 2005. "The role of intermediaries in corruption," Public Choice, Springer, vol. 122(3), pages 277-298, March.
    6. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, number 9780521872751, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Roberto Burguet & Juan José Ganuza & José Garcia Montalvo, 2016. "The microeconomics of corruption. A review of thirty years of research," Economics Working Papers 1525, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Graf Lambsdorff, Johann, 2010. "Deterrence and constrained enforcement: Alternative regimes to deal with bribery," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-60-10, University of Passau, Faculty of Business and Economics.
    3. Frédéric Koessler & Ariane Lambert-Mogiliansky, 2012. "Optimal Extortion and Political Risk Insurance," Working Papers halshs-00672963, HAL.
    4. Frédéric Koessler & Ariane Lambert-Mogiliansky, 2012. "Optimal Extortion and Political Risk Insurance," PSE Working Papers halshs-00672963, HAL.
    5. Gautam Bose, 2010. "Aspects of Bureaucratic Corruption," Discussion Papers 2010-14, School of Economics, The University of New South Wales.
    6. Ivanov, A. & Maslova, S., 2014. "Applying modelling in the process of anti-corruption expertise of legal regulation of public procurement," Working Papers 6382, Graduate School of Management, St. Petersburg State University.
    7. repec:ces:ifodic:v:9:y:2011:i:2:p:16132588 is not listed on IDEAS
    8. Di Guardo, Maria Chiara & Marrocu, Emanuela & Paci, Raffaele, 2016. "The effect of local corruption on ownership strategy in cross-border mergers and acquisitions," Journal of Business Research, Elsevier, vol. 69(10), pages 4225-4241.
    9. Ajit Mishra & Andrew Samuel, 2016. "Corruption and hold-up: the role of intermediaries," European Journal of Law and Economics, Springer, vol. 41(3), pages 575-599, June.
    10. Koessler, Frédéric & Lambert-Mogiliansky, Ariane, 2014. "Extortion and political-risk insurance," Journal of Public Economics, Elsevier, vol. 120(C), pages 144-156.
    11. Meixing Dai & Moïse Sidiropoulos & Eleftherios Spyromitros, 2015. "Fiscal Policy, Institutional Quality and Central Bank Transparency," Manchester School, University of Manchester, vol. 83(5), pages 523-545, September.
    12. Ariane Lambert-Mogiliansky, 2011. "Corruption and Collusion: Strategic Complements in Procurement," Chapters,in: International Handbook on the Economics of Corruption, Volume Two, chapter 4 Edward Elgar Publishing.
    13. Ivanov, A., 2015. "How to improve effectiveness of anti-corruption expertise: Public procurement case," Working Papers 6433, Graduate School of Management, St. Petersburg State University.
    14. Sheopuri, Anshul & Zemel, Eitan, 2010. "A note on the properties of the optimal solution(s) of the Greed and Regret problem," European Journal of Operational Research, Elsevier, vol. 204(3), pages 690-693, August.
    15. Pablo Morales, Jorge Finke, 2015. "Small-World Networks of corruption," REVISTA CIFE, UNIVERSIDAD SANTO TOMÁS, August.

    More about this item

    Keywords

    Petty corruption; Intermediaries; Game-theory;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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