An Economic Investigation of Corruption and Electricity Theft

Faisal Jamil and Eatzaz Ahmad
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Eatzaz Ahmad: Quaid-i-Azam University, Islamabad

No 2013:92, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: Theft and corruption are common in electricity distribution systems worldwide. We have analysed electricity theft in the framework of an individual’s choice under uncertainty and through a three-layered principalagent- client model of corruption. The study finds that an individual steals electricity only if the subjective benefits are higher than the associated costs e.g., fine imposed in case of detection or job dismissal. The fair tariffs and efficiency wages along with higher deterrence and active consumer involvement in reporting electricity theft can help in combating corruption and pilferage in electricity sector. Moreover, deterrence through increased probability of detection and conviction are important policy measures.

Keywords: Individual’s Choice; Principal-Agent Model; Electricity Theft (search for similar items in EconPapers)
JEL-codes: H8 K1 Q4 R2 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2013
New Economics Papers: this item is included in nep-cwa and nep-ene
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: An Economic Investigation of Corruption and Electricity Theft (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pid:wpaper:2013:92

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