On the Economic Modeling of Corruption
Mahler-Hutter, Manuel This work discusses the economic literature on Corruption. I draw the distinction between market- and parochial corruption. The institutions and the corrupt contract are the base of the following analysis. Corruption happens within a Principal-Agent relationship. Corruption may flourish if economic rents exist, the costs of corruption are low or if the agents have large discretionary power. I discuss whether corruption always has to have negat...