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Gift policy, bribes and corruption

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  • Mehmet Bac

    (Sabanci University)

Abstract

A ban on gifts in public offices partially deters bribery but may induce undeterred bribers to switch from gifts to money. The rise in the use of a more liquid instrument (money) increases the bribe acceptance rate and, possibly, the measure of unqualified applications approved by the office. A gift ban may thus amplify the social costs of corruption by allocating public resources to the wrong people. It is shown that the optimal limited gift ban with a value cap binding on “expensive” gifts dominates the free gifts policy. The limited ban has weaker deterrence than the complete ban but it may reduce the social costs of corruption by minimizing the switch from gifts to money.

Suggested Citation

  • Mehmet Bac, 2019. "Gift policy, bribes and corruption," European Journal of Law and Economics, Springer, vol. 47(2), pages 255-275, April.
    • Handle: RePEc:kap:ejlwec:v:47:y:2019:i:2:d:10.1007_s10657-019-09611-y
    DOI: 10.1007/s10657-019-09611-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Gifts; Liquidity; Bribery; Public policy; Social costs;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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