Cadot, O. (1987), Corruption as a Gamble
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Article | |
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Has bibtex key | |
Has article title | Corruption as a Gamble |
Has author | Cadot, O. |
Has year | 1987 |
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Model
- Firm has to request operational permit from official
- Official asks bribe, b, from firm
- Firm pays bribe if b<v, if not reports official who is fired
- infinite period game
Comparative Statics
- If wages raised optimal bribe requested is smaller, but because its smaller, it is paid more often
- So paying higher wages in public sector could lead to more but petty corruption
- When discount factor is bigger the size of the bribe is smaller, because official cares more about the future.