Partners in crime : collusive corruption and search

Nabin, Munirul Haque and Bose, Gautam 2008, Partners in crime : collusive corruption and search, B.E. journal of economic analysis and policy, vol. 8, no. 1, Article 9, pp. 1-21.

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Title Partners in crime : collusive corruption and search
Author(s) Nabin, Munirul Haque
Bose, Gautam
Journal name B.E. journal of economic analysis and policy
Volume number 8
Issue number 1
Season Article 9
Start page 1
End page 21
Total pages 21
Publisher Berkeley Electronic
Place of publication Berkeley, Calif.
Publication date 2008
ISSN 1935-1682
Summary This paper analyzes corruption as a collusive act which requires the participation of two willing partners. An agent intending to engage in a corrupt act must search for a like-minded partner. When many people in the economy are corrupt, such a search is more likely to be fruitful. Thus when an agent engages in a search, he raises the net benefit of searching for other similar agents in the economy, creating an externality. This introduces a non-convexity in the model, which consequently has multiple equilibria. The economy can be in stable equilibrium with a high or low level of corruption.

Starting from the high-corruption equilibrium, a sufficient increase in vigilance triggers a negative cascade, leading the economy to a new equilibrium in which no agent finds it profitable to search for corrupt partners. The no-corruption equilibrium continues to be stable if vigilance is then relaxed. This suggests that the correct way to deal with corruption is to launch a ``big push'' with large amounts of resources. Once the level of corruption declines, these resources can be withdrawn.
Language eng
Field of Research 140399 Econometrics not elsewhere classified
Socio Economic Objective 919999 Economic Framework not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2008, Walter de Gruyter GmbH & Co. KG
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017931

Document type: Journal Article
Collection: Deakin Graduate School of Business
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