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Partners in Crime: Collusive Corruption and Search

Author

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  • Nabin Munirul Haque

    (Deakin University)

  • Bose Gautam

    (University of New South Wales)

Abstract

This paper analyzes corruption as a collusive act which requires the participation of two willing partners. An agent intending to engage in a corrupt act must search for a like-minded partner. When many people in the economy are corrupt, such a search is more likely to be fruitful. Thus when an agent engages in a search, he raises the net benefit of searching for other similar agents in the economy, creating an externality. This introduces a non-convexity in the model, which consequently has multiple equilibria. The economy can be in stable equilibrium with a high or low level of corruption.Starting from the high-corruption equilibrium, a sufficient increase in vigilance triggers a negative cascade, leading the economy to a new equilibrium in which no agent finds it profitable to search for corrupt partners. The no-corruption equilibrium continues to be stable if vigilance is then relaxed. This suggests that the correct way to deal with corruption is to launch a ``big push'' with large amounts of resources. Once the level of corruption declines, these resources can be withdrawn.

Suggested Citation

  • Nabin Munirul Haque & Bose Gautam, 2008. "Partners in Crime: Collusive Corruption and Search," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-23, April.
    • Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:9
    DOI: 10.2202/1935-1682.1926
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    Cited by:

    1. Lisciandra Maurizio & Miralles Asensio Antonio & Monteforte Fabio, 2024. "Search and Matching in Political Corruption," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 24(1), pages 69-96, January.
    2. Douglas A. Hibbs, Jr. & Violeta Piculescu, 2008. "Tax Toleration and Tax Compliance: How Government Affects the Propensity of Firms to Enter the Unofficial Economy," Discussion Papers 7_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    3. Douglas A. Hibbs & Violeta Piculescu, 2010. "Tax Toleration and Tax Compliance: How Government Affects the Propensity of Firms to Enter the Unofficial Economy," American Journal of Political Science, John Wiley & Sons, vol. 54(1), pages 18-33, January.

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