Uncertainty, Entrepreneurship and the Organisation of Corruption
We develop a model of occupational choice in which private agents have the option of either working in some costless, but low-yielding, activity (subsistence production), or undertaking a costly, but potentially more rewarding, venture (entrepreneurship). In the case of the latter, loans must be acquired from ?nancial intermediaries and licenses must be obtained from public officials. Associated with these tasks are two potential sources of imperfection - an imperfection in fi?nancial markets due to asymmetric information and an imperfection in governance due to rent-seeking. Rent-seeking is risky because of a random probability that it will be detected and punished. Against this background, we show how corruption has di¤erent effects depending on the way that it is practised: in the case of disorganised corruption, bribe payments are uncertain and capital market imperfections are allowed to surface; in the case of organised corruption both of these features are removed. The implication is that, in terms of deterring entrepreneurial activity, organised corruption is likely to be the lesser of the two evils, even if bribe demands are higher in this case. This result may be used to explain the puzzle of why corruption appears to be much less damaging in some countries than in others.
|Date of creation:||2009|
|Contact details of provider:|| Postal: Manchester M13 9PL|
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.socialsciences.manchester.ac.uk/subjects/economics/our-research/centre-for-growth-and-business-cycle-research/
More information through EDIRC
References listed on IDEAS
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.:
- Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2006. "Financial Liberalisation, Bureaucratic Corruption and Economic," Proceedings of the German Development Economics Conference, Berlin 2006 8, Verein für Socialpolitik, Research Committee Development Economics.
- Bose, Gautam, 2004. "Bureaucratic delays and bribe-taking," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 313-320, July.
- Ratbek Dzhumashev, 2007. "Corruption, Uncertainty And Growth," Monash Economics Working Papers 15-07, Monash University, Department of Economics.
- Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2009.
"Why is corruption less harmful in some countries than in others?,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 72(3), pages 797-810, December.
- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2007. "Why is Corruption Less Harmful in Some Countries Than in Others?," Centre for Growth and Business Cycle Research Discussion Paper Series 88, Economics, The Univeristy of Manchester.
- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2009. "Why is Corruption Less Harmful in Some Countries Than in Others?," Post-Print hal-00725353, HAL.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implications for Growth," NBER Working Papers 3530, National Bureau of Economic Research, Inc.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1991. "The Allocation of Talent: Implications for Growth," Scholarly Articles 27692664, Harvard University Department of Economics.
- repec:cup:cbooks:9780521659123 is not listed on IDEAS
- Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 270-293, December.
- Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2007. "Distribution and development in a model of misgovernance," European Economic Review, Elsevier, vol. 51(6), pages 1534-1563, August.
- K Blackburn & G F Forgues-Puccio, 2004. "Distribution and Development in a Model of Misgovernance," Centre for Growth and Business Cycle Research Discussion Paper Series 42, Economics, The Univeristy of Manchester.
- Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2005. "Distribution and Development in a Model of Misgovernance," Proceedings of the German Development Economics Conference, Kiel 2005 15, Verein für Socialpolitik, Research Committee Development Economics.
- Marco Celentani & Juan-José Ganuza, 2002. "Organized vs. Competitive Corruption," Annals of Operations Research, Springer, vol. 109(1), pages 293-315, January.
- Marco Celentani & Juan J. Ganuza, 2001. "Organized vs. competitive corruption," Economics Working Papers 526, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2001.
- Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, vol. 18(2), pages 215-240, June.
- repec:cup:cbooks:9780521632935 is not listed on IDEAS Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:man:cgbcrp:133. 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: (Marianne Sensier)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.