The Choice Between Market Failures and Corruption

Acemoğlu, Daron; Verdier, Thierry

doi:10.1257/aer.90.1.194

Cited by 568 publications

(380 citation statements)

References 7 publications

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“…As argued by Acemoglu and Verdier (2000), government intervention transfers resources to the private sphere creating room for corruption. This view also sustains that "extensions of privatization and market competition are an effective cure for a corrupt state".…”

Section: Introductionmentioning

confidence: 99%

Corruption and the effects of economic freedom

Pieroni

d’Agostino

2013

European Journal of Political Economy

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The predictions that economic freedom is beneficial in reducing corruption have not been found to be universally robust in empirical studies. The present work reviews this relationship by using firms' data in a cross-country survey and argues that approaches using aggregated macro data have not been able to explain it appropriately. We model cross-country variations of the microfounded economic freedom-corruption relationship using multilevel models. Additionally, we analyze this relationship by disentangling the determinants for several components of economic freedom because not all areas affect corruption equally. The results show that the extent of the macro-effects on the measures of (micro)economic freedom for corruption, identified by the degree of economic development of a country, can explain why a lack of competition policies and government regulations may yield more corruption. Estimations for Africa and transition economy subsamples confirm our conjectures.JEL : H10; H11; H50; K20; O5

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Section: Introductionmentioning

confidence: 99%

Corruption and the effects of economic freedom

Pieroni

d’Agostino

2013

European Journal of Political Economy

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“…Some recent evidence lends support to the view that the effects of informal payments depend not only on the scale of SMCs but also on the amoral nature of profiteers [26]. Especially in traditional economies and countries that are unsound, profiteers and bureaucrats are inclined to take advantage of institutional loopholes to illicitly squirrel away huge sums [27]. For an incumbent and a newcomer, to adapt to the disorder of the market, the SMC is committed to dealing with anomie.…”

Section: Innovation and Corruption In Privately Owned Smcsmentioning

confidence: 99%

Corruption and Technological Innovation in Private Small-Medium Scale Companies: Does Female Top Management Play a Role?

2018

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Common acts of corruption such as bribery and informal payments are virtually illegal everywhere and prevalent in every corner of the world. This paper aims to contribute to the literature by considering the influences of corruption and female top management on the likelihood of technological innovation by using a nationwide survey and a sample of private small-medium sized companies (SMCs) in China. Interestingly, we find that female top managers have less enthusiasm for innovation than their male counterparts. Corruption, when measured by informal payments, poses a positive effect on the possibility of innovation after controlling for firm-level characteristics. However, female executives may weaken the positive innovation effects caused by corruption. Furthermore, one of our implied findings is that a firm with a female top manager is less likely to engage in corruption because this may raise the costs of doing business without any benefits for innovation. The results collectively illustrate the role that female top management and corrupt actions have in shaping innovative activities of private SMCs, and suggest that bribe-combating actions in firms are necessary, such as a framework for rationalizing the proportion of female executives involved in management.

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“…11 There are also other contributions, such as those of Hindriks et al (1999) and Acemoglu and Verdier (2000), which have analyzed the problem of extortion in regulation and law enforcement contexts. 12 In particular, the authors assume that the information is soft for the agent-supervisor coalition, whilst it is hard for the supervisor alone, who bears an infinite cost to falsify evidence on her own.…”

Section: Playersmentioning

confidence: 99%

The threat of corruption and the optimal supervisory task

Chiara¹,

Livio

2017

Journal of Economic Behavior & Organization

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In this paper we investigate the task the supervisor should be optimally charged with in an agency model in which the principal faces corruption concerns. We highlight a fundamental tradeoff between monitoring the agent's effort choice and auditing it ex-post. Monitoring proves more effective in tackling corruption since the supervisor sends the report before the profit realization. By taking advantage of the supervisor's uncertainty about the state of nature, the principal can design a compensation scheme which prevents all forms of corruption at a lower cost. Conversely auditing reduces the cost of supervision as the principal hires the supervisor only if the profit does not convey enough information about the compensation due to the agent. We show that the ultimate choice between monitoring and auditing depends on the supervisor's ability to falsify information and the cost of performing an inspection.

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The Choice Between Market Failures and Corruption

Cited by 568 publications

References 7 publications

Corruption and the effects of economic freedom

Corruption and the effects of economic freedom

Corruption and Technological Innovation in Private Small-Medium Scale Companies: Does Female Top Management Play a Role?

The threat of corruption and the optimal supervisory task

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