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Corruption: Outbribing the Competition

Author

Listed:
  • Koustougeras, Leonidas

    (University of Manchester, School of Social Sciences)

  • Santos, Manuel

    (University of Miami, School of Business Administration)

  • Xu, Fei

    (Department of Economics, Umeå University)

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.

Suggested Citation

  • Koustougeras, Leonidas & Santos, Manuel & Xu, Fei, 2024. "Corruption: Outbribing the Competition," Umeå Economic Studies 1028, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:1028
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    More about this item

    Keywords

    Corruption; bribe; adverse selection;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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