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Bureaucracy Intermediaries, Corruption and Red Tape

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  • Anders Fredriksson

    () (Center for Research in the Economics of Development, University of Namur)

Abstract

Intermediaries helping individuals and rms with the government bureaucracy are common in developing countries. Although such bureaucracy intermediaries are, anecdotally,linked with corruption and welfare losses, few formal analyses exist. In our model, a government license can bene t individuals. We study individuals net gain when acquiring the license through the regular procedure, through bribing or through intermediaries. For a given procedure, individuals using intermediaries are better offthan if intermediaries and corruption had not existed. Intermediaries grease the wheels. We then study incentives of corrupt bureaucrats to create red tape. When free to choose levels of red tape, bureaucrats implement more red tape and individuals are unambiguously worse off in a setting with intermediaries than with direct corruption only. Intermediaries can thus improve access to the bureaucracy, but also strengthen incentives to create red tape - a potential explanation ! why license procedures tend to be long in developing countries.

Suggested Citation

  • Anders Fredriksson, 2013. "Bureaucracy Intermediaries, Corruption and Red Tape," Working Papers 1202, University of Namur, Department of Economics.
  • Handle: RePEc:nam:wpaper:1202
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    References listed on IDEAS

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    Cited by:

    1. Charles Angelucci & Antonio Russo, 2015. "Petty corruption and citizen feedback," Working Papers 2015/25, Institut d'Economia de Barcelona (IEB).
    2. William W. Olney, 2016. "Impact Of Corruption On Firm-Level Export Decisions," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1105-1127, April.
    3. King Yoong Lim, 2017. "The Dynamics of Corruption and Unemployment in a Growth Model with Heterogeneous Labour," Working Papers 198144263, Lancaster University Management School, Economics Department.
    4. Charles Angelucci & Antonio Russo, 2015. "Petty Corruption and Citizen Reports," CESifo Working Paper Series 5528, CESifo Group Munich.
    5. Kifle Wondemu, 2016. "The Economic Value of Time: Evidence from Africa," South African Journal of Economics, Economic Society of South Africa, vol. 84(2), pages 230-244, June.

    More about this item

    Keywords

    Bureaucracy; Corruption; Intermediaries; Red tape;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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