IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/6933.html
   My bibliography  Save this paper

Asymmetric punishment as an instrument of corruption control

Author

Listed:
  • Basu, Karna
  • Basu, Kaushik
  • Cordella, Tito

Abstract

The control of bribery is a policy objective in many developing countries. It has been argued that asymmetric punishments could reduce bribery by incentivizing whistle-blowing. This paper investigates the role played by asymmetric punishment in a setting where bribe size is determined by Nash bargaining, detection is costly, and detection rates are set endogenously. First, when detection rates are fixed, the symmetry properties of punishment are irrelevant to bribery. Bribery disappears if expected penalties are sufficiently high; otherwise, bribe sizes rise as expected penalties rise. Second, when detection rates are determined by the bribe-giver, a switch from symmetric to asymmetric punishment either eliminates bribery or allows it to persist with larger bribe sizes. Furthermore, when bribery persists, multiple bribe sizes could survive in equilibrium. The paper derives parameter values under which each of these outcomes occurs and discusses how these could be interpreted in the context of existing institutions.

Suggested Citation

  • Basu, Karna & Basu, Kaushik & Cordella, Tito, 2014. "Asymmetric punishment as an instrument of corruption control," Policy Research Working Paper Series 6933, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6933
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/06/23/000158349_20140623155925/Rendered/PDF/WPS6933.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    2. Basu, Kaushik & Bhattacharya, Sudipto & Mishra, Ajit, 1992. "Notes on bribery and the control of corruption," Journal of Public Economics, Elsevier, vol. 48(3), pages 349-359, August.
    3. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    4. Lambsdorff, Johann & Nell, Mathias, 2007. "Fighting corruption with asymmetric penalties and leniency," Center for European, Governance and Economic Development Research Discussion Papers 59, University of Goettingen, Department of Economics.
    5. Amrita Dillon & MANDAR OAK, 2015. "Legalization of Bribe Giving when Bribe Type Is Endogenous," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(4), pages 580-604, August.
    6. Nicolas Melissas, 2009. "Corruption, Extortion, and the Boundaries of the Law," Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(2), pages 442-471, October.
    7. Christoph Engel & Sebastian Goerg & Gaoneng Yu, 2012. "Symmetric vs. Asymmetric Punishment Regimes for Bribery," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_01, Max Planck Institute for Research on Collective Goods, revised May 2013.
    8. Abbink, Klaus & Dasgupta, Utteeyo & Gangadharan, Lata & Jain, Tarun, 2014. "Letting the briber go free: An experiment on mitigating harassment bribes," Journal of Public Economics, Elsevier, vol. 111(C), pages 17-28.
    9. Anant, T. C. A. & Mukherji, Badal & Basu, Kaushik, 1990. "Bargaining without convexity : Generalizing the Kalai-Smorodinsky solution," Economics Letters, Elsevier, vol. 33(2), pages 115-119, June.
    10. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roberto Burguet & Juan José Ganuza & José Garcia Montalvo, 2016. "The microeconomics of corruption. A review of thirty years of research," Economics Working Papers 1525, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Perrotta Berlin, Maria & Spagnolo, Giancarlo & Qin, Bei, 2015. "Leniency, Asymmetric Punishment and Corruption: Evidence from China," SITE Working Paper Series 34, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 25 May 2017.
    3. Avinash K. Dixit, 2015. "How Business Community Institutions Can Help Fight Corruption," World Bank Economic Review, World Bank Group, vol. 29(suppl_1), pages 25-47.
    4. repec:kap:annfin:v:15:y:2019:i:1:d:10.1007_s10436-018-0329-0 is not listed on IDEAS
    5. repec:spr:jbecon:v:88:y:2018:i:7:d:10.1007_s11573-018-0893-9 is not listed on IDEAS
    6. Dimant, Eugen & Deutscher, Christian, 2014. "The Economics of Corruption in Sports – The Special Case of Doping," MPRA Paper 60566, University Library of Munich, Germany.
    7. Dhammika Dharmapala & Vikramaditya Khanna, 2017. "Stock Market Reactions to India's 2016 Demonetization: Implications for Tax Evasion, Corruption, and Financial Constraints," CESifo Working Paper Series 6707, CESifo Group Munich.
    8. Astrid Gamba & Giovanni Immordino & Salvatore Piccolo, 2016. "Organized Crime and the Bright Side of Subversion of Law," DISCE - Working Papers del Dipartimento di Economia e Finanza def039, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    9. Sergey V. Popov, 2016. "On Basu's Proposal: Fines Affect Bribes," Economics Working Papers 16-04, Queen's Management School, Queen's University Belfast.
    10. repec:eee:pubeco:v:159:y:2018:i:c:p:79-88 is not listed on IDEAS
    11. Basu,Kaushik, 2015. "The republic of beliefs : a new approach to ?law and economics?," Policy Research Working Paper Series 7259, The World Bank.
    12. Gamba, Astrid & Immordino, Giovanni & Piccolo, Salvatore, 2018. "Corruption, organized crime and the bright side of subversion of law," Journal of Public Economics, Elsevier, vol. 159(C), pages 79-88.
    13. Adriana Gama & Isabelle Maret & Virginie Masson, 2019. "Endogenous heterogeneity in duopoly with deterministic one-way spillovers," Annals of Finance, Springer, vol. 15(1), pages 103-123, March.

    More about this item

    Keywords

    Public Sector Corruption&Anticorruption Measures; Crime and Society; Corruption&Anticorruption Law; Social Accountability; Business Ethics; Leadership and Values;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:6933. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.