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What is the contribution of the theory of redistribution systems to the theory of corruption?

Author

Listed:
  • Milan Palat

    (Department of Territorial Studies, Faculty of Regional Development and International Studies, Mendel University in Brno)

  • Petr Wawrosz

    (Faculty of Economic Studies, The University of Finance and Administration)

  • Tomas Otahal

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

Abstract

Scholars making economic policy recommendations to resolve corruption problem use several approaches, the most dominant of which are the principal-agent and rent-seeking theories. In this paper, we argue that the principal-agent theory has problems accounting for the environment in which the agents offering and accepting corruption operate, as well as explaining the importance of the agents for the survival of their environment. The rent-seeking theory, on the other hand, finds it difficult to establish socially effective legislation and ways to determine the barriers to entry that motivate agents to behave corruptly. Both problems, however, are vital for solving the problem of corruption. Lacking the knowledge of the agent's environment (system) and their significance for the survival of the system, the theory cannot define incentives that would discourage the agent from acting in a corrupted way. If the rent-seeking theory does not determine the barriers to entry that motivate agents to behave corruptly, it cannot determine the proper legislation that would deter corrupt behavior and lead to economic development. For these reasons we investigate if both problems can be explained and solved within the alternative theory of redistribution systems and its part - the theory of parallel redistribution games.

Suggested Citation

  • Milan Palat & Petr Wawrosz & Tomas Otahal, 2012. "What is the contribution of the theory of redistribution systems to the theory of corruption?," MENDELU Working Papers in Business and Economics 2012-25, Mendel University in Brno, Faculty of Business and Economics.
    • Handle: RePEc:men:wpaper:25_2012
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    References listed on IDEAS

    as
    1. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    2. Enrico Colombatto, 2003. "Why is Corruption Tolerated?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 16(4), pages 363-379, December.
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    Cited by:

    1. Petr Wawrosz & Semen Traksel, 2023. "Negative Interest Rates and Its Impact on GDP, FDI and Banks’ Financial Performance: The Cases of Switzerland and Sweden," IJFS, MDPI, vol. 11(2), pages 1-23, May.
    2. Jan Lánský & Jiří Mihola & Petr Wawrosz, 2022. "Mathematical Modelling of Qualitative System Development," Mathematics, MDPI, vol. 10(15), pages 1-23, August.
    3. Petr Wawrosz, 2022. "How Corruption Is and Should Be Investigated by Economic Theory," Economies, MDPI, vol. 10(12), pages 1-23, December.

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    More about this item

    Keywords

    Corruption; redistribution system; parallel redistribution game; game theory;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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