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On Basu’s Proposal: Fines Affect Bribes

Sergey Popov ()

No E2017/11, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: I model the connection between the equilibrium bribe amount and the fines imposed on both bribe-taker and bribe-payer. I show that Basu’s (2011) proposal to lower the fines imposed on bribe-payers in order to induce more whistleblowing and increase the probability of penalizing corrupt government officials might instead increase bribe amounts. Higher expected fines on bribe-takers will make them charge larger bribes; at the same time, lowering fines for bribe-paying might increase bribe-payers’ willingness to pay bribes.

Keywords: corruption; bribery; extortion; decentralization; fines (search for similar items in EconPapers)
JEL-codes: H8 K4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law and nep-mic
Date: 2017-09
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Working Paper: On Basu's Proposal: Fines Affect Bribes (2016) Downloads
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