Prevention and detection in bribery-affected public procurement
In environments where regulations are lax and controls function badly, cleanly participating in tenders is irrational. An increase in one single firm’s propensity to bribe induces the same behaviour upon the others (“bad apple effect”), and the likelihood of firms to bribe tends to uniformity. Competition unsettles the equilibrium, so that, ceteris paribus, the overall likelihood of bribing tends to a maximum determined by the control mechanisms. The factors affecting the expectation of public officials are the same, with the added feature that usually public officials have no rewards for not taking bribes. For both participants and agents, simple methods to empirically determine parameters and to evaluate whether or not bribery probably prevails in a given market are suggested. The system’s tendency to deteriorate points to policy strategies aimed at continuously perfecting the regulations and the control mechanisms. As the latter are expensive, it is argued that continuously acting on the regulations to diminish the opportunities for manipulation of conditions has a more profound effect on the overall efficiency of the system, including but beyond control of corruption.
|Date of creation:||02 Sep 2003|
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