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Corruption in Entry Regulation: A Game-theoretic Analysis with a Track of Bureaucrats

Author

Listed:
  • Tetsuro Mizoguchi

    (Institute of Economic Research, Kyoto University)

  • Nguyen Van Quyen

    (Department of Economics, University of Ottawa)

Abstract

In this paper, we analyze the corruption in entry regulation that involves an entrepreneur and a track of bureaucrats. Instead of formulating a game in extensive form to analyze the sequential nature of the process involved in the application for a permit, we focus on the corruption in entry regulations that involves both entrepreneur and multiple bureaucrats to negotiate simultaneously for bribes from the mechanism design perspectives. Our results are the following: First, because of the asymmetry of information, the entrepreneur might not obtain the required permit, although collectively as a group, the joint net payoff of the entrepreneur and the bureaucrats is positive. Second, the entrepreneur might pay the bribes without getting the permit.

Suggested Citation

  • Tetsuro Mizoguchi & Nguyen Van Quyen, 2008. "Corruption in Entry Regulation: A Game-theoretic Analysis with a Track of Bureaucrats," Keio/Kyoto Joint Global COE Discussion Paper Series 2008-008, Keio/Kyoto Joint Global COE Program.
    • Handle: RePEc:kei:dpaper:2008-008
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