A Note on Licenses in the Presence of Corruption
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Amy Farmer
Abstract
We study the effectiveness of licenses in environments with corruption. We expand the standard model so that bribery is feasible not only when licenses are granted but also when enforced or verified. This modification alters many prior results on bribery and licensing significantly. Specifically, we show that in some cases penalties for bribery at the license-granting stage complement penalties for bribery at the permit-enforcement stage. In other cases, they act as substitutes for each other. These results are especially important for often used regulatory policies in which licenses are used in conjunction with some form of subsequent license verification. Thus, our model suggests that studying the impact of bribery at the license-granting stage should not be conducted without simultaneously studying bribery at the permit verification stage.
Acknowledgements
Andrew Samuel (corresponding author, asamuel@loyola.edu) is an associate of economics at Loyola University Maryland. Amy Farmer is a professor of economics at the University of Arkansas. Fabio Méndez is a professor of economics at Loyola University Maryland. Andrew Samuel would like to thank Ajit Mishra for useful conversations on this topic.
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Articles in the same Issue
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- Enforcement and Deterrence in Merger Control: The Case of Merger Remedies
- Distributive Justice, Public Policies and the Comparison of Legal Rules: Quantify the “Price of Equity”
- Using Eminent Domain for Economic Development: Does it Increase Private Sector Employment?
- Utility Misperception in a Vertically Differentiated Duopoly
- A Note on Licenses in the Presence of Corruption
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Articles in the same Issue
- Articles
- Enforcement and Deterrence in Merger Control: The Case of Merger Remedies
- Distributive Justice, Public Policies and the Comparison of Legal Rules: Quantify the “Price of Equity”
- Using Eminent Domain for Economic Development: Does it Increase Private Sector Employment?
- Utility Misperception in a Vertically Differentiated Duopoly
- A Note on Licenses in the Presence of Corruption
- The Foundations of Judicial Diffusion in China: Evidence from an Experiment
