The dynamics of corruption with the Ratchet effect

Arbeitspapier

This paper provides a simple model of corruption dynamics with the ratchet effect. Corrupt officials have ex post the incentive to price discriminate entrepreneurs based on the entry decisions made in an earlier period. The inability of government officials to commit to future money demands induces entrepreneurs to delay entry in order to receive a discount in the permit price later. Even though the dynamic setting leaves the corrupt official with less extortion power, social welfare may decrease. We also explore the effect of the official's tenure stability on the extent of corruption. This allows us to identify circumstances under which the often observed practice of job rotation can help mitigate corruption.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Dresden Discussion Paper Series in Economics ; No. 04/01

Classification and Topics

• Classification: Wirtschaft
• Subject: corruption dynamics ; ratchet effect ; ex post opportunism ; dynamic consistency ; Korruption ; Kriminalitätsökonomik ; Zeitpräferenz ; Konzession ; Markteintritt ; Theorie ; Wiederholte Spiele

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Choi, Jay Pil ; Thum, Marcel
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
• (where): Dresden
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/48144
• Last update: 10.03.2025, 11:43 AM CET