Corruptible Law Enforcers: How Should They Be Compensated?

Dilip Mookherjee and Ivan Png

Economic Journal, 1995, vol. 105, issue 428, 145-59

Abstract: The authors study the optimal compensation policy for a corruptible inspector charged with monitoring pollution from a factory. Their utilitarian approach focuses on the trade-off among corruption, pollution, and enforcement effort. Owing to the strategic interaction between factory and inspector, changes in compensation policy have surprising effects, e.g., raising the penalty for corruption may cause pollution to increase. The authors find that bribery is an inefficient way of encouraging the inspector to monitor; society should wipe out corruption. Copyright 1995 by Royal Economic Society.

Date: 1995
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