Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 12/04: How middle-men can undermine anti-corruption reforms

Kjetil Bjorvatn (), Gaute Torsvik () and Bertil Tungodden ()
Additional contact information
Kjetil Bjorvatn: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, Postal: Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Gaute Torsvik: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Bertil Tungodden: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, Postal: Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: The anti-corruption reform in the Tanzanian tax bureaucracy in the mid-1990s was apparently a short-lived success. In the wake of the reform, a number of “tax experts” established themselves in the market, many of them being laid off tax bureaucrats. We argue that middle-men can undermine the effect of an anti-corruption reform by reducing the uncertainty that firms face vis-à-vis a reformed tax bureaucracy, which in turn may encourage firms to pay bribes rather than taxes. Indeed, under some circumstances, middle-men can cause corruption to be higher after the reform than before the reform. Since the demand for middle-men may increase with the extent of the reform, we also demonstrate that a small reform may be more efficient in combatting corruption than a more radical reform.

Keywords: Corruption; reform; middle-men; institutions

JEL-codes: H26; K42; O12

28 pages, December 6, 2004

Full text files

12-04.pdf PDF-file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Kjell Erik Lommerud ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2019-05-28 15:22:20.