Legalizing Bribes

Martin Dufwenberg and Giancarlo Spagnolo

No 1117, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: Harassment bribes - payments people give in order not to be denied what they are legally entitled to - are common in for example India. Kaushik Basu recently made a radical proposal to reduce its occurrence: Legalize the act of giving the bribe and double the fine for accepting the bribe! We develop a formal model and delineate circumstances under which Basu's proposal works well or poorly. We discuss a modified scheme where immunity is conditional on reporting that we argue addresses the main issues raised against the proposal. We highlight complementarities between these schemes and other policies aimed at improving the accountability and performance of the public sector, and of law enforcement agencies in particular. We conclude discussing the implications for the fight of more harmful forms of corruption.

Pages: 30 pages
Date: 2011, Revised 2011-12
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Legalizing Bribes (2013)
Working Paper: Legalizing Bribe Giving (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:1117

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