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An Economic Investigation of Corruption and Electricity Theft

Author

Listed:
  • Faisal Jamil

    (National University of Science and Technology, Islamabad)

  • Eatzaz Ahmad

    (Quaid-i-Azam University, Islamabad)

Abstract

Theft and corruption are common in electricity distribution systems worldwide. We have analysed electricity theft in the framework of an individual’s choice under uncertainty and through a three-layered principalagent- client model of corruption. The study finds that an individual steals electricity only if the subjective benefits are higher than the associated costs e.g., fine imposed in case of detection or job dismissal. The fair tariffs and efficiency wages along with higher deterrence and active consumer involvement in reporting electricity theft can help in combating corruption and pilferage in electricity sector. Moreover, deterrence through increased probability of detection and conviction are important policy measures.

Suggested Citation

  • Faisal Jamil & Eatzaz Ahmad, 2013. "An Economic Investigation of Corruption and Electricity Theft," PIDE-Working Papers 2013:92, Pakistan Institute of Development Economics.
  • Handle: RePEc:pid:wpaper:2013:92
    as

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    File URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-92.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Individual’s Choice; Principal-Agent Model; Electricity Theft;

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • H8 - Public Economics - - Miscellaneous Issues
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • K1 - Law and Economics - - Basic Areas of Law

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