Corruption and Bureaucratic Structure in a Developing Economy
Bennett, J. Ohn; Estrin, Saul
2006-02-01
Abstract
We address the impact of corruption in a developing economy in the context of an empirically relevant hold-up problem - when a foreign firm sinks an investment to provide infrastructure services. We focus on the structure of the economy’s bureaucracy, which can be centralized or decentralized, and characterize the ëcorruptibility’ of bureaucrats in each case. Results are explained in terms of the noninternalization, under decentralization, of the ëbribe externality’ and the ëprice externality.’ In welfare terms, decentralization is favoured, relatively speaking, if the tax system is less inefficient, funding is less tight, bureaucrats are less venal, or compensation for expropriation is ungenerous.Other Identifiers
RePEc:wdi:papers:2006-825
Series/Report no.
825
Subjects
Corruption, Bureaucratic Structure, Developing Economy
Types
Working Paper
Metadata
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