Nonergodic Corruption Dynamics (or, Why Do Some Regions within a Country Become More Corrupt than Others?)

Author: VERBRUGGE, RANDAL J.

Source: Journal of Public Economic Theory, Volume 8, Number 2, May 2006 , pp. 219-245(27)

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Abstract:

Two key aspects of corruption are strategic complementarity (the greater the prevailing level of corruption, the more likely is a particular agent to engage in it) and localized interactions (officials typically interact repeatedly with a small group of other officials, their colleagues). This paper builds a simple model with these two features, which studies the evolution of corruption. Over time, local networks of corruption (or honest behavior) endogenously emerge, and otherwise identical regions can end up with divergent corruption levels. Anti-corruption policies are studied.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1467-9779.2006.00261.x

Affiliations: 1: Division of Price and Index Number Research, Bureau of Labor Statistics

Publication date: 2006-05-01