The Microeconomics of Corruption: The Classical Approach
The economic relation between market structure, government preferences, & the incidence of corruption is analyzed, drawing on Rose-Ackerman's (1975, 1978) microeconomic model of corruption. In this model, three types of agents are posited: the (honest) policymaker, the lower-level bureaucrat whose purchasing decisions may include bribes, & firms offering the government goods or services. The likelihood of corruption is assessed in the cases of corruption where the government has well-defined/unclear preferences, the goods are homogeneous/differentiated, & private markets for the goods exist. The policy implications of this model for encouraging/discouraging corruption & the usefulness of penalties are discussed. Efficient firms & nonstandard goods lead to a higher incidence of corruption; political influence may also play a role. 4 Figures, 1 Appendix. M. Pflum