Political corruption in the execution of public contracts

Artikel

This paper presents a novel theoretical framework to explain the occurrence of corruption in public procurement. It extends the agency cost-padding model by Laffont and Tirole (1992) to allow for the principal to be a partially selfish politician who can design the contract auditing policy. It is found that a benevolent politician, by choosing a sufficiently strict auditing, deters the contracting firm from padding costs; conversely, a selfish politician chooses a relatively lax auditing in order to create an incentive for cost-padding, and engages in corruption with the firm in case of detection. If the cost of auditing is high enough, even a benevolent politician might prefer to allow cost-padding.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Economic Behavior & Organization ; ISSN: 1879-1751 ; Volume: 179 ; Year: 2020 ; Pages: 116-140 ; Amsterdam: Elsevier

Classification and Topics

• Classification: Wirtschaft ; Bureaucracy; Administrative Processes in Public Organizations; Corruption ; Asymmetric and Private Information; Mechanism Design ; Economics of Regulation
• Subject: Corruption in procurement ; Cost-padding ; Selfish politician ; Endogenous auditing ; Procurement contracts ; Principal-agent model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chiappinelli, Olga
• Event: Veröffentlichung
• (who): Elsevier ; ZBW - Leibniz Information Centre for Economics
• (where): Amsterdam
• (when): 2020

Further information

• DOI: doi:10.1016/j.jebo.2020.08.044
• Handle: http://hdl.handle.net/10419/276231
• Last update: 10.03.2025, 11:42 AM CET