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Legalizing Bribe Giving

  • Martin Dufwenberg
  • Giancarlo Spagnolo

A model of ’harassment bribes,’ paid for services one is entitled to, is developed to analyze the proposal to legalize paying these bribes while increasing fines on accepting them. We explore performance as regards corruption deterrence and public service provision. Costs of verifying reports make the scheme more effective against larger bribes and where institutions’ quality is higher. A modified scheme, where immunity is conditional on reporting, addresses some key objections. The mechanism works better against more distortionary forms of corruption than harassment bribes, provided monetary rewards can compensate bribers for losing the object of the corrupt exchange. Results highlight strong complementarities with policies aimed at improving independence and accountability of law enforcers. JEL Classification Numbers: D73, K42, O17 Keywords: Bribes, Corruption, Immunity, Law enforcement, Leniency, Whistleblowers

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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 515.

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Date of creation: 2014
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Handle: RePEc:igi:igierp:515
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