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Strategic analysis of petty corruption with an intermediary

Author

Listed:
  • Ariane Lambert-Mogiliansky

    (PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Mukul Majumdar

    (Economics Department - Cornell University - Cornell University [New York])

  • Roy Radner

    (Stern School of Business - NYU - New York University [New York] - NYU - NYU System)

Abstract

This note reports part of a larger study of "petty corruption" by government bureaucrats in the process of approving new business projects. Each bureaucrat may demand a bribe as a condition of approval. Entrepreneurs use the services of an intermediary who, for a fee, undertakes to obtain all of the required approvals. In a dynamic game model we investigate (1) the multiplicity of equilibria, (2) the equilibria that are "socially efficient", and (3) the equilibria that maximize the total expected bureaucrats' bribe income. We compare these results with those for the case in which entrepreneurs apply directly to the bureaucrats.

Suggested Citation

  • Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2009. "Strategic analysis of petty corruption with an intermediary," Post-Print halshs-00754385, HAL.
    • Handle: RePEc:hal:journl:halshs-00754385
    DOI: 10.1007/s10058-008-0068-1
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    References listed on IDEAS

    as
    1. Leonid Hurwicz, 2008. "But Who Will Guard the Guardians?," American Economic Review, American Economic Association, vol. 98(3), pages 577-585, June.
    2. Lambert-Mogiliansky, Ariane & Majumdar, Mukul & Radner, Roy, 2007. "Strategic analysis of petty corruption: Entrepreneurs and bureaucrats," Journal of Development Economics, Elsevier, vol. 83(2), pages 351-367, July.
    3. Hasker, Kevin & Okten, Cagla, 2008. "Intermediaries and corruption," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 103-115, July.
    4. Barnett,William A. & Schofield,Norman & Hinich,Melvin (ed.), 1993. "Political Economy: Institutions, Competition and Representation," Cambridge Books, Cambridge University Press, number 9780521428316, September.
    5. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2007. "Strategic Analysis of Petty Corruption: Bureaucrats and Entrepreneurs," PSE-Ecole d'économie de Paris (Postprint) halshs-00754220, HAL.
    6. Ariane Lambert‐Mogiliansky & Mukul Majumdar & Roy Radner, 2008. "Petty corruption: A game‐theoretic approach," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 273-297, June.
    7. Güzin Bayar, 2005. "The role of intermediaries in corruption," Public Choice, Springer, vol. 122(3), pages 277-298, March.
    8. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, number 9780521872751, September.
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    More about this item

    Keywords

    Petty corruption; Intermediaries; Game-theory;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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