The institutional economics of corruption and reform

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Dedication......Page 7
Contents......Page 9
List of boxes......Page 10
Acknowledgements......Page 11
A road map to this book......Page 13
1.1. Why this book?......Page 17
1.2. Defining corruption......Page 31
1.3. Measuring corruption......Page 36
2 Enemies of corruption......Page 43
2.1. Unavoidable corruption......Page 44
2.2. Candidates for reform......Page 53
2.3. A novel inspiration to reform......Page 64
3 What is bad about bureaucratic corruption? An institutional economic approach......Page 74
3.1. Corruption and market distortions......Page 75
3.2. The principal–agent approach......Page 78
3.3. Welfare implications......Page 81
3.4. Corruption as the principal\'s choice......Page 85
3.5. Evidence......Page 87
3.6. Conclusions......Page 96
4 The dilemma of the kleptocrat What is bad about political corruption?......Page 97
4.1. Inefficiency by design......Page 99
4.2. The constrained principal......Page 101
4.3. The kleptocrat\'s dilemma......Page 105
4.4. The credibility problem......Page 112
4.5. Empirical evidence......Page 116
4.6. Conclusions......Page 123
5.1. Introduction......Page 125
5.2. The traditional rent-seeking approach......Page 126
Transaction costs......Page 127
Competition for rents......Page 128
5.3. The traditional rent-seeking approach to corruption......Page 129
Transaction costs of corruption......Page 130
Corruption versus competition......Page 131
Endogenous rents......Page 133
Supplying rents......Page 136
Narrow interests......Page 141
5.5. Two applications......Page 144
5.6. Conclusions......Page 146
Appendix: A formal model......Page 147
6.1. Introduction......Page 152
Seeking the partner......Page 155
Determining contract conditions......Page 157
Legal enforcement......Page 160
Hostages......Page 163
Reputation......Page 165
Repetition......Page 166
Vertical integration......Page 168
Social embeddedness......Page 169
6.4. The aftermath......Page 170
Denunciation and extortion......Page 171
Resulting contract design......Page 174
6.5. Conclusions......Page 177
7.1. Introduction......Page 180
7.2. Corruption as an art......Page 182
7.3. The trade approach......Page 191
7.4. Survey results......Page 194
7.5. Comparing different approaches......Page 197
7.6. Conclusion......Page 199
Appendix: Technical details to the trade-regressions......Page 203
8.1. Introduction......Page 206
8.2. Reciprocity, network ties, and corruption......Page 210
8.3. The data......Page 211
8.4. Regression analysis......Page 215
Appendix 1: Description of WB/UB-data......Page 219
Appendix 2: Technical details to the regressions......Page 220
9.1. Introduction......Page 225
Transaction cost analysis......Page 226
Relational contracting......Page 228
Corrupt contracting......Page 230
9.3. Linking corruption to legal exchange......Page 231
Case 1......Page 232
Case 2......Page 233
Case 3......Page 234
The Philippine Jueteng......Page 236
9.4. Conclusion and policy recommendations......Page 238
10 Concluding thoughts......Page 241
Objective versus subjective data......Page 252
Sources in 2005......Page 253
Year-to-year comparisons......Page 256
Validity......Page 257
Standardization......Page 261
Reliability and precision......Page 263
Confidence range......Page 264
Weighting......Page 269
References......Page 272
Index......Page 298