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Decentralized Bribery and Market Participation

  • Popov, Sergey V.

I propose a bribery model with decentralized bureaucratic decisionmaking. There are multiple stable equilibria: high levels of bribery reduce the economy's productivity due to suppression of small businesses, and reduces the total graft even though it might increase the individual bribe amount. The coordinated deviation to a better participation equilibrium is impossible due to decentralization. Anti-corruption efforts, even temporary, might be useful if they invite better participation.

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File URL: https://mpra.ub.uni-muenchen.de/43829/1/MPRA_paper_43829.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43829.

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Date of creation: 26 Sep 2012
Date of revision: 16 Jan 2013
Handle: RePEc:pra:mprapa:43829
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  1. Vito Tanzi & Hamid Reza Davoodi, 1997. "Corruption, Public Investment, and Growth," IMF Working Papers 97/139, International Monetary Fund.
  2. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andre Shleifer, 2000. "The Regulation of Entry," Harvard Institute of Economic Research Working Papers 1904, Harvard - Institute of Economic Research.
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  9. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 207-230.
  10. Del Monte, Alfredo & Papagni, Erasmo, 2007. "The determinants of corruption in Italy: Regional panel data analysis," European Journal of Political Economy, Elsevier, vol. 23(2), pages 379-396, June.
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  13. Drugov, Mikhail, 2010. "Competition in bureaucracy and corruption," Journal of Development Economics, Elsevier, vol. 92(2), pages 107-114, July.
  14. Paolo Mauro, 2004. "The Persistence of Corruption and Slow Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 51(1), pages 1.
  15. In-Koo Cho & David M. Kreps, 1997. "Signaling Games and Stable Equilibria," Levine's Working Paper Archive 896, David K. Levine.
  16. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Working Papers 98/63, International Monetary Fund.
  17. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  18. Hillman, Arye L. & Katz, Eliakim, 1987. "Hierarchical structure and the social costs of bribes and transfers," Journal of Public Economics, Elsevier, vol. 34(2), pages 129-142, November.
  19. Kahana, Nava & Qijun, Liu, 2010. "Endemic corruption," European Journal of Political Economy, Elsevier, vol. 26(1), pages 82-88, March.
  20. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
  21. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
  22. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
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