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Partners in Crime: Collusive Corruption and Search

  • Munirul Haque Nabin and Gautam Bose
Published/Copyright: April 28, 2008
The B.E. Journal of Economic Analysis & Policy
From the journal The B.E. Journal of Economic Analysis & Policy Volume 8 Issue 1

Abstract

This paper analyzes corruption as a collusive act which requires the participation of two willing partners. An agent intending to engage in a corrupt act must search for a like-minded partner. When many people in the economy are corrupt, such a search is more likely to be fruitful. Thus when an agent engages in a search, he raises the net benefit of searching for other similar agents in the economy, creating an externality. This introduces a non-convexity in the model, which consequently has multiple equilibria. The economy can be in stable equilibrium with a high or low level of corruption.Starting from the high-corruption equilibrium, a sufficient increase in vigilance triggers a negative cascade, leading the economy to a new equilibrium in which no agent finds it profitable to search for corrupt partners. The no-corruption equilibrium continues to be stable if vigilance is then relaxed. This suggests that the correct way to deal with corruption is to launch a ``big push'' with large amounts of resources. Once the level of corruption declines, these resources can be withdrawn.

Keywords: corruption; search; coordination; vigilance; multiple equilibria
Published Online: 2008-4-28

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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https://doi.org/10.2202/1935-1682.1926
Keywords for this article
corruption; search; coordination; vigilance; multiple equilibria

Articles in the same Issue

  1. Frontiers Article
  2. The Causal Effect of Studying on Academic Performance
  3. The Market: Catalyst for Rationality and Filter of Irrationality
  4. Advances Article
  5. Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs
  6. Risk Attitude in Real Decision Problems
  7. The Effect of FDI on Job Security
  8. On the Optimal Allocation of Students and Resources in a System of Higher Education
  9. Giving It Away for Free? The Nature of Job-Market Signaling by Open-Source Software Developers
  10. Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002
  11. Lucky Last? Intra-Sibling Allocation of Child Labor
  12. Technological Proximity and Exclusive Buyer-Supplier Relationships
  13. The Internet and the Market for Daily Newspapers
  14. Optimal Policy with Heterogeneous Preferences
  15. A Representation Index: Measuring the Representation of Minorities in the Income Distribution
  16. Starting School at Four: The Effect of Universal Pre-Kindergarten on Children's Academic Achievement
  17. Contributions Article
  18. The Economics of Workaholism: We Should Not Have Worked on This Paper
  19. Millers, Commission Agents and Collusion in Grain Markets: Evidence from Basmati Auctions in North India
  20. Resources for Sale: Corruption, Democracy and the Natural Resource Curse
  21. Partners in Crime: Collusive Corruption and Search
  22. An Empirical Study of Happiness in Italy
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  24. Income Insecurity and Youth Emancipation: A Theoretical Approach
  25. Pay Peanuts and Get Monkeys? Evidence from Academia
  26. Entry and Exit in the Nonprofit Sector
  27. Discrimination as a Competitive Device: The Case of Local Television News
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  29. Functional Distribution, Land Ownership and Industrial Takeoff: The Role of Effective Demand
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  36. Informality Traps
  37. Topics Article
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  39. Strategic Behavior and Social Norms in Tipped Service Industries
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  55. After-School Supervision and Children's Cognitive Achievement
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