Pre‐emptive Corruption, Hold‐up and Repeated Interactions

Bibliographic Data

ID9727911
AuthorsEmmanuel Dechenaux (0000-0003-4734-0793, Kent State University, corresponding author), Andrew Samuel (0000-0002-8059-3365, Loyola University Maryland)
Year2012
Volume79
Issue314
Pages258-283
Publication date2012-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/j.1468-0335.2011.00898.x
OpenAlexW2105187247
LanguageEN
Citations received3
References cited30

This paper analyses repeated interactions between a firm and an inspector who monitors regulatory compliance. The firm may offer a bribe to pre‐empt the inspection. Corruption is unfeasible in the one‐shot game because of inspector hold‐up. In an infinitely repeated game, we characterize the set of bribes that can be sustained as equilibrium paths using the trigger strategy. In this model, the most likely bribe‐givers are not the firms that benefit the most from the illegal behaviour. Furthermore, strengthening anti‐corruption policies has ambiguous welfare effects because it improves compliance only among a subset of firms, and increases monitoring effort

Business · Compliance (psychology) · Economics · Game theory · Language change · Market economy · Microeconomics · Public economics · Repeated game · Set (abstract data type) · Welfare · Auction Theory and Applications · Computer Science · Corruption and Economic Development · Law, Economics, and Judicial Systems · Psychology · Social Psychology

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