Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 1028: Corruption: Outbribing the Competition
Leonidas Koustougeras (), Manuel Santos () and Fei Xu ()
Additional contact information
Leonidas Koustougeras: University of Manchester, School of Social Sciences
Manuel Santos: University of Miami, School of Business Administration
Fei Xu: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden
Abstract: We extend the prototypical models of corruption to a setting of multiple agents (donors) attempting to bribe the same body of officers. The model recognizes that corruption is a complex many-faceted phenomenon involving several layers of players (bureaucracies, committees, companies, and criminal partnerships) with dissimilar and conflicting interests. Three main ingredients drive corruption outcomes: competition among donors, uncertainty and coordination among the officers' types, and the individual payoffs of bribing. We analyze market failures and ineffciencies arising from the strategies and interactions of these parties. A policy maker may then want to design indirect anti-corruption policies based on triggering information asymmetries and adverse selection effects exploiting synergies within pools of officers and in this way impede the formation of certain criminal groups.
Keywords: Corruption; bribe; adverse selection
Language: English
32 pages, October 24, 2024
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