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Title: The Supply of and Demand for Corruption
Other Titles: العرض والطلب في الفساد _ تحليل إقتصادي
Authors: Azar, Samih Antoine
Issue Date: 2003
Publisher: University of Balamand
Part of: Chronos
Issue: 8
Start page: 205
End page: 219
In this paper the economics of a simple course in principles is applied to the subject of corruption. It is shown that the demand for corruption depends negatively on the price of corruption, i.e., the amount paid to obtain a public service beyond its stated fee. Corruption also depends on the tastes and culture of the land, a permissive country being, ceteris paribus, more corrupt. Higher income, either aggregate or personal, would, in the analysis, increase the demand for corruption, leading to a higher price. A bigger population, for the same level of public institutions, would also increase the demand and the price of corruption. On the supply side, higher costs, whether legal or judiciary, would undercut the supply of corruption, raising the price but decreasing the amount of corruption. Nationalizations, and a bigger public involvement in the nation's economy, would increase the supply of corruption, decreasing its price at the same time. So far the underlying assumption was that of a perfect competition in corruption. The existence of a mafia, which means that corrupt services are now rendered in a monopoly, would increase the price of corruption, and restrict its equilibrium amount. It would also lead to price discrimination in all its forms. It may also lead to rent-seeking by a competing mafia. Finally it is stated that corruption regulated by a mafia would be more difficult to eradicate than corruption in a perfect competition, because the mafia's past, present and future profits do not depend on a single person but are the possession of a parallel organization that has specialized in corruption.
Open URL: Link to full text
Type: Journal Article
Appears in Collections:Chronos

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