Co-authored with L. Koutsougeras (U Manchester) and M. Santos (U of Miami).
We approach corruption using a game-theoretic framework with a government and a donor bribing an officer. We perform various comparative statics exercises motivated by policy considerations. Under a taxonomy of corruption based upon the “ability-to-pay" and the officer's cost of breaking the law, the model makes some definite predictions about the structure of the anti-corruption measure and the bribe, and offers further insights into the empirics of corruption. An increase in the officer's wage will be counterbalanced by a compensatory bribe, and hence pay will not be an effective tool to combat corruption. An increase in the efficiency of crime detection and enforcement will encourage further investment in the anti-corruption measure and will lower the value of the bribe..
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