PUBLIC UTILITIES IN EGALITARIAN LDC's: THE ROLE OF BRIBERY IN ACHIEVING PARETO EFFICIENCY

Salim Rashid ()

Kyklos, 1981, vol. 34, issue 3, 448-460

Abstract: This article points out that the egalitarian ideals adopted by many Less Developed Countries (LDC's) often lead to an inefficient allocation of resources because productive and unproductive agents are given equal access to public facilities. Productive agents then find it worthwhile to bribe their way into obtaining differential access to such public facilities —e.g., the telephone system. As long as bureaucrats look upon such bribes as windfall gains, the efficiency of the economic system can be improved. In practice, however, LDC bureaucracies often come to look upon such incomes as a systematic part of their remuneration and this leads them to pursue bribes rather than carry out their appointed duties; as a result, the system as a whole becomes increasingly inefficient.

Date: 1981
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