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On Basu's Proposal: Fines Affect Bribes

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  • Sergey V. Popov

Abstract

I provide a model that connects the bribe amount with the fines imposed on both bribe-taker and bribe-payer. I show that the proposal of Basu (2011) to not punish bribe-payers to induce whistleblowing does not have to help lower bribes. Higher fines on bribe-takers will make them ask for larger bribes, whereas lowering fines for bribe-paying on bribe-payers might increase their willingness to pay the bribe. An increase in transparency, if achieved, effectively increases both fines simultaneously.

Suggested Citation

  • Sergey V. Popov, 2016. "On Basu's Proposal: Fines Affect Bribes," Economics Working Papers 16-04, Queen's Management School, Queen's University Belfast.
  • Handle: RePEc:qub:wpaper:1604
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    References listed on IDEAS

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    1. Mookherjee, Dilip & Png, I P L, 1995. "Corruptible Law Enforcers: How Should They Be Compensated?," Economic Journal, Royal Economic Society, vol. 105(428), pages 145-159, January.
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    6. Basu, Kaushik, 2011. "Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal," MPRA Paper 50335, University Library of Munich, Germany.
    7. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-1023, October.
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    9. Khan, Adnan Q. & Khwaja, Asim I. & Olken, Benjamin A., 2016. "Tax farming redux: experimental evidence on performance pay for tax collectors," LSE Research Online Documents on Economics 66265, London School of Economics and Political Science, LSE Library.
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    14. repec:bla:jpbect:v:18:y:2016:i:6:p:831-856 is not listed on IDEAS
    15. Karna Basu & Kaushik Basu & Tito Cordella, 2016. "Asymmetric Punishment as an Instrument of Corruption Control," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(6), pages 831-856, December.
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    More about this item

    Keywords

    Corruption; Bribery; Decentralization; Fines;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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