Legalization of Bribe Giving when Bribe Type is Endogenous

Mandar Oak

No 2013-06, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: In a provocative paper, Basu (2011) argues that for a class of bribes, called harassment bribes, legalization of bribe giving will reduce bribery. We examine the applicability of Basu's insight in a realistically complex environment in which the type of the bribe---harassment or non-harassment---is endogenously determined, and it is not feasible to legalize the giving of non-harassment bribes. We find that in such environment Basu's proposal, in and of itself, yields mixed results: in some cases it can reduce even the prevalence of non-harassment bribes and improve social welfare. However, in other cases it will be counter-productive, i.e., it can reduce social welfare while failing to eliminate bribery. Our analysis points to additional policies aimed at strengthening the legal institutions which, in conjunction with Basu's proposal, will help reduce bribery.

Keywords: Corruption; Bribery; Harassment Bribes; Non-Harassment Bribes (search for similar items in EconPapers)
JEL-codes: D73 K42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2013-04
New Economics Papers: this item is included in nep-cwa and nep-law
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Legalization of Bribe Giving when Bribe Type Is Endogenous (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2013-06

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