Beneficial collusion in corruption control: the case of nonmonetary penalties

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Baç, Mehmet and Bag, Parimal Kanti (2006) Beneficial collusion in corruption control: the case of nonmonetary penalties. Journal of development economics, 81 (2). pp. 478-499. ISSN 0304-3878

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Official URL: http://dx.doi.org/10.1016/j.jdeveco.2005.06.007


We analyze a corruption model where a principal seeks to control an agent's corruption by supplementing a costless noncollusive outside detector such as the media with a collusive internal supervisor. The principal's objective is to minimize the overall costs, made up of enforcement costs and social costs of corruption. If the penalties on the corrupt agent and a failing supervisor are nonmonetary in nature and yet the two parties can engage in monetary side-transfers, the principal may stand to benefit by allowing supervisoragent collusion. This benefit may even prompt the principal to actively encourage collusion by hiring a dishonest supervisor in strict preference over an honest supervisor.

Item Type:Article
Uncontrolled Keywords:corruption; monitoring; collusion; bounty hunter mechanism
Subjects:H Social Sciences > HB Economic Theory
ID Code:236
Deposited By:Mehmet Baç
Deposited On:20 Feb 2007 02:00
Last Modified:17 Sep 2019 14:12

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