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Cadot, O. (1987), Corruption as a Gamble (view source)
Revision as of 15:49, 16 May 2012
, 15:49, 16 May 2012New page: Return to BPP Field Exam Papers 2012] ===Model=== *Firm has to request operational permit from official *Official asks bribe, b, from firm *Firm pays bribe if b<v, if not reports offi...
Return to [[BPP Field Exam Papers 2012]]]
===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
===Competitive 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.
===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
===Competitive 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.
