Corruption: Outbribing the Competition

Leonidas Koustougeras (), Manuel Santos () and Fei Xu ()
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Leonidas Koustougeras: University of Manchester, School of Social Sciences
Manuel Santos: University of Miami, School of Business Administration
Fei Xu: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, https://www.umu.se/handelshogskolan

No 1028, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: We develop a game-theoretic model of competing parties attempting to bribe a bureaucrat. We conclude that anticorruption policies in this context should be tailored to the underlying characteristics of the environment. We introduce some novel theoretical constructs: compensatory bribe functions embedding the bureaucrat's disposition towards the demands of each party, the interdependence of the competing interests (rival, complementary, orthogonal), and the relative abilities to pay bribes (balanced and unbalanced). We study the extent of corruption and bribe levels over these various dimensions. If interests are rival and the abilities to pay are balanced, we get a deadlock equilibrium in which bribes are submitted but the officer is unable to decide or favor a specific party.

Keywords: Corruption; bribe; adverse selection (search for similar items in EconPapers)
JEL-codes: D71 D80 D82 D86 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2024-10-24, Revised 2025-08-12
New Economics Papers: this item is included in nep-cta
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