This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 90 No. 1 (March 2000)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

The Choice between Market Failures and Corruption

Article Citation

Acemoglu, Daron, and Thierry Verdier. 2000. "The Choice between Market Failures and Corruption." American Economic Review, 90(1): 194-211.

DOI: 10.1257/aer.90.1.194

Abstract

Because government intervention transfers resources from one party to another, it creates room for corruption. As corruption often undermines the purpose of the intervention, governments will try to prevent it. They may create rents for bureaucrats, induce a misallocation of resources, and increase the size of the bureaucracy. Since preventing all corruption is excessively costly, second-best intervention may involve a certain fraction of bureaucrats accepting bribes. When corruption is harder to prevent, there may be both more bureaucrats and higher public-sector wages. Also, the optimal degree of government intervention may be nonmonotonic in the level of income.

Article Full-Text Access

Full-text Article

Authors

Acemoglu, Daron (MIT)
Verdier, Thierry (DELTA-ENS and CERAS)

JEL Classifications

O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
D73: Bureaucracy; Administrative Processes in Public Organizations; Corruption


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us