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The Determinants of the Contract of Corruption: Theory and Evidence

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Abstract

This paper develops the notion that corruption is a contract between a public official and a private agent and that the features of this contract depend on the allocation of bargaining power between the parties. Active corruption thus occurs when the public official fixes the terms of the contract and is otherwise considered passive. Employing Italian data on various corruption-based regional-level crimes, the paper empirically reassesses the causes of corruption. A simple theoretical model highlights the differences between these two forms of corruption in terms of bribery and emphasizes the implications both for aggregate corruption and its measurement.

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  • Salvatore Capasso & Lodovico Santoro, 2016. "The Determinants of the Contract of Corruption: Theory and Evidence," CSEF Working Papers 429, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:429
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    More about this item

    Keywords

    active corruption; passive corruption; bargaining power;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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