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The Distributive Effects of Corruption*

Published online by Cambridge University Press:  12 February 2014

Mircea Popa
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Abstract

This article puts forward an explanation of the resilience of corruption by arguing that this phenomenon offers net gains to a much larger share of the population than just corrupt government officials. Corruption is modeled as a solution to an allocation problem for a generic government good G. The defining features of this solution are the existence of a market for G when it is not supposed to exist, and the fact that, in that market, contracts cannot be enforced by an outside agent and transactions are usually secret. Corruption redistributes welfare toward ‘insiders’ who share some natural connection to the government and to other insiders. Corruption also redistributes welfare toward those who are skilled at imposing negative externalities.

Type
Original Articles
Information
Political Science Research and Methods , Volume 2 , Issue 2 , October 2014 , pp. 273 - 296
Copyright
Copyright © The European Political Science Association 2014 

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Footnotes

*Mircea Popa is Leitner Post-Doctoral Research Associate, MacMillan Center, Yale University, 34 Hillhouse Ave, 06520, New Haven, CT, USA (mpopa.mail@gmail.com). Many thanks to Torben Iversen and James Robinson for guidance in this project, to two anonymous reviewers for helping improve the manuscript, and to William Clark and seminar participants at the EPSA 2012 Annual Meeting for helpful comments on the article. To view supplementary material for this article, please visit http://dx.doi.org/10.1017/psrm.2013.29

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