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The Determinants of the Contract of Corruption: Theory and Evidence

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Abstract

This paper develops the notion that corruption is a contract between a public official and a private agent and that the features of this contract depend on the allocation of bargaining power between the parties. Active corruption thus occurs when the public official fixes the terms of the contract and is otherwise considered passive. Employing Italian data on various corruption-based regional-level crimes, the paper empirically reassesses the causes of corruption. A simple theoretical model highlights the differences between these two forms of corruption in terms of bribery and emphasizes the implications both for aggregate corruption and its measurement.

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  • Salvatore Capasso & Lodovico Santoro, 2016. "The Determinants of the Contract of Corruption: Theory and Evidence," CSEF Working Papers 429, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  • Handle: RePEc:sef:csefwp:429
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    File URL: http://www.csef.it/WP/wp429.pdf
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    5. Vito Tanzi, 1998. "Corruption Around the World; Causes, Consequences, Scope, and Cures," IMF Working Papers 98/63, International Monetary Fund.
    6. Blackburn, Keith & Bose, Niloy & Emranul Haque, M., 2006. "The incidence and persistence of corruption in economic development," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2447-2467, December.
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    8. 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.
    9. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
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    12. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    13. Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, vol. 18(2), pages 215-240, June.
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    More about this item

    Keywords

    active corruption; passive corruption; bargaining power;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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