Corruption and the Hadleyburg effect

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• dc.contributor.author Celentani, Marcoca
• dc.contributor.author Ganuza, Juan-Joséca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T12:07:50Z
• dc.date.available 2017-07-26T12:07:50Z
• dc.date.issued 1999-04-01
• dc.date.modified 2017-07-23T02:04:30Z
• dc.description.abstract We study the dynamics of corruption relying on two fundamental observations: (a) Given agents detected as corrupt are typically fired and replaced, the historical levels of corruption have an impact on current corruption through the distribution of corruption costs of old agents; (b) Institutions negatively affected by their agents' corrupt activities are likely to respond optimally to it thereby decreasing the payoff from being corrupt. We model this situation by considering an agent who is supposed to monitor a contractor's delivery of a product or service and can manipulate his reports thus allowing the contractor to deliver lower quality in exchange for a bribe. Given the two generations of agents overlapping at any particular date, the administration sets an optimal level of quality in each period. We find that (i) A unique steady state level of corruption exists; (ii) Regardless of the initial distribution, apart from an initial period, equilibrium sequences are decreasing and converge to the steady state, a result we term the "Hadleyburg effect". We use these findings to study the dynamic response of corruption to both temporary and permanent shocks to the profitability of corruption and we find that the "Hadleyburg effect" has important positive and normative implications.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=382
• dc.identifier.uri http://hdl.handle.net/10230/641
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 382
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword corruption dynamics
• dc.subject.keyword Microeconomics
• dc.title Corruption and the Hadleyburg effectca
• dc.type info:eu-repo/semantics/workingPaper