Skip to main content
Log in

On the persistence of corruption

Journal of Economics Aims and scope Submit manuscript

Abstract

This paper tries to answer the question why the phenomenon of corruption seems to be inherently existent in any society. The dynamic model presented shows how rational agents may generate multiple equilibria of corruption within the same kind of socio-economic system. We assume that the individual disutility caused by the loss of reputation from a corrupt transaction depends on the acceptance of corrupt behavior by the representative individual. Depending on the values of some key parameters like the marginal utility of corrupt behavior and the initial acceptance of corruption a completely corrupt equilibrium where all people completely accept corruption or a completely honest equilibrium where corruption is not accepted at all may be the limit state of the optimal path. Also inner equilibria in-between exist; however, they are always unstable.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

References

  • Akerlof, G. A. (1980): “A Theory of Social Custom, of Which Unemployment May Be One Consequence.”Quarterly Journal of Economics 94: 749–775.

    Google Scholar 

  • Andvig, J. C. (1991): “The Economics of Corruption: a Survey.”Studi Economici 43: 57–94.

    Google Scholar 

  • Antoci, A., and Sacco, P. L. (1995): “A Public Contracting Evolutionary Game with Corruption.”Journal of Economics/Zeitschrift für Nationalökonomie 61: 89–122.

    Google Scholar 

  • Basu, K., Bhattacharya, S., and Mishra, A. (1992): “Notes on Bribery and the Control of Corruption.”Journal of Public Economics 48: 349–359.

    Google Scholar 

  • Biccheri, C., and Rovelli, C. (1995): “Evolution and Revolution: the Dynamics of Corruption.”Rationality and Society 7: 201–224.

    Google Scholar 

  • Dawid, H., and Feichtinger, G. (1996): “Optimal Allocation of Drug Control Efforts: a Differential Game Analysis.”Journal of Optimization Theory and Applications 91: 279–297.

    Google Scholar 

  • Feichtinger, G., and Hartl, R. F. (1986):Optimale Kontrolle ökonomischer Prozesse: Anwendungen des Maximumprinzips in den Wirtschaftswissenschaften. Berlin: de Gruyter.

    Google Scholar 

  • Feichtinger, G., and Wirl, F. (1994): “On the Stability and Potential Cyclicity of Corruption in Governments Subject to Popularity Constraints.”Mathematical Social Sciences 28: 113–131.

    Google Scholar 

  • Hartl, R. F. (1987): “A Simple Proof of the Monotonicity of the State Trajectories in Autonomous Control Problems.”Journal of Economic Theory 41: 211–215.

    Google Scholar 

  • Marjit, S., and Shi, H. L. (1996): “On Controlling Crime with Corrupt Officials.”Journal of Economic Behavior and Organisation (forthcoming).

  • Michel, P. (1982): “On the Transversality Condition in Infinite Horizon Optimal Control Problems.”Econometrica 50: 975–985.

    Google Scholar 

  • Mookherjee, D., and Png, I. P. L. (1995): “Corruptible Law Enforcers: How Should They Be Compensated.”Economic Journal 105: 145–159.

    Google Scholar 

  • Rauch, B. (1995): “On the Monotonicity of the State Variable in Autonomous Control Problems.” Mimeo, University of Regensburg, Regensburg.

    Google Scholar 

  • Rose-Ackerman, S. (1978):Corruption: a Study in Political Economy. New York: Academic Press.

    Google Scholar 

  • Seierstad, A., and Sydsaeter, K. (1993):Optimal Control Theory with Economic Applications. Amsterdam: North-Holland.

    Google Scholar 

  • Wirl, F., Novak, A., Feichtinger, G., and Dawid, H. (1995): “Indeterminacy of Open-Loop Nash Equilibria: the Ruling Class versus the Tabloid Press.” InUncertainty: Models and Measures, edited by Y. Ben-Haim. Berlin: Akademie-Verlag (forthcoming).

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and permissions

About this article

Cite this article

Dawid, H., Feichtinger, G. On the persistence of corruption. Zeitschr. f. Nationalökonomie 64, 177–193 (1996). https://doi.org/10.1007/BF01250114

Download citation

  • Received:

  • Revised:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF01250114

Keywords

JEL classification

Navigation