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Legalizing Bribes

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Harassment bribes - payments people give in order not to be denied what they are legally entitled to – are common in for example India. Kaushik Basu recently made a '’radical'’ proposal to reduce its occurrence: Legalize the act of giving the bribe and double the fine for accepting the bribe! We develop a formal model and delineate circumstances under which Basu’s proposal works well or poorly. We discuss a modified scheme where immunity is conditional on reporting that we argue addresses the main issues raised against the proposal. We highlight complementarities between these schemes and other policies aimed a improving the accountability and performance of the public sector, and of law enforcement agencies in particular. We conclude discussing the implications for the fight of more harmful forms of corruption.

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  • Spagnolo, Giancarlo & Dufwenberg, Martin, 2011. "Legalizing Bribes," SITE Working Paper Series 13, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 12 May 2013.
    • Handle: RePEc:hhs:hasite:0013
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    1. Buccirossi, Paolo & Spagnolo, Giancarlo, 2006. "Leniency policies and illegal transactions," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1281-1297, August.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. How to fight corruption
      by Economic Logician in Economic Logic on 2012-02-06 21:25:00

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    1. Abbink, Klaus & Dasgupta, Utteeyo & Gangadharan, Lata & Jain, Tarun, 2014. "Letting the briber go free: An experiment on mitigating harassment bribes," Journal of Public Economics, Elsevier, vol. 111(C), pages 17-28.

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    More about this item

    Keywords

    Bribes; Corruption; Governance; Immunity; Law enforcement; Leniency; Whistleblowers.;
    All these keywords.

    JEL classification:

    • 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
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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