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Corruption, Exogenous Changes in Incentives and Deterrence

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  • Di Vita, Giuseppe

Abstract

In this article we apply and extend the model elaborated by Acemoglu and Verdier in their seminal paper (2000), to examine how the economy represented in their theoretical framework responds to an exogenous change in the agent's incentive. In particular, we focus on the consequences of a famous sentence of the Italian Supreme Court in plenary session, no. 500 of 1999, in which a revolutionary interpretation of civil liability rules is introduced, allowing private agents of our economy to appear before the court to demand reimbursement for the damages suffered as a consequence of illicit behavior of the public administration. This is one of the few cases in which the judex substantially makes law in a system of civil law, and the modification in incentive whether or not to be corrupted comes from an authority that is not part of the game (the jurisdictional power). Basing our affirmations on the model, we can say that corruption may have declined in Italy since the year 2000, as a result of a change in the incentives for both private agents and bureaucrats.

Suggested Citation

  • Di Vita, Giuseppe, 2006. "Corruption, Exogenous Changes in Incentives and Deterrence," Corporate Social Responsibility and Sustainable Management Working Papers 12126, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcs:12126
    DOI: 10.22004/ag.econ.12126
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    More about this item

    Keywords

    Public Economics;

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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