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Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach

Daron Acemoglu and Thierry Verdier

Economic Journal, 1998, vol. 108, issue 450, 1381-1403

Abstract: The authors consider an economy where contracts are necessary to encourage investments. Contract enforcement requires that a fraction of the agents work in the public sector and do not accept bribes. The authors find that (1) it may be optimal to allow some corruption and not enforce property rights fully; (2) less developed economies may choose lower levels of property right enforcement and more corruption; and (3) there may exist a 'free-lunch' such that over a certain range it is possible simultaneously to reduce corruption, increase investment, and achieve a better allocation of talent.

Date: 1998
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Working Paper: Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach (1996) Downloads
Working Paper: Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach (1996)
Working Paper: Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach (1996)
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