Abstract

http://ssrn.com/abstract=829844
 
 

References (27)



 
 

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Legal Corruption


Daniel Kaufmann


The Brookings Institution

Pedro C. Vicente


New University of Lisbon - Nova School of Business and Economics

November 24, 2005


Abstract:     
We challenge the conventional definition of corruption as the abuse of public office for private gain, making a distinction between legal and illegal forms of corruption, and paying more attention to corporate patterns of corruption (which also affect public corruption). We undertake to identify general determinants of the pattern of legal and illegal corruption worldwide, and present a model where both corruption (modeled explicitly in the context of allocations) and the political equilibrium are endogenous. Three types of equilibrium outcomes are identified as a function of basic parameters, namely initial conditions (assets/productivity), equality, and fundamental political accountability. These equilibria are: i) an illegal corruption equilibrium, where the political elite does not face binding incentives; ii) a legal corruption equilibrium, where the political elite is obliged to incur on a cost to deceive the population; and iii) a no-corruption equilibrium, where the population cannot be deceived. An integral empirical test of the model is performed, using a broad range of variables and sources. Its core variables, namely regarding legal corruption (and other manifestations of corporate corruption) come from an original survey developed with the World Economic Forum (in the Executive Opinion Survey 2004 of the Global Competitiveness Report). The empirical results generally validate the model and explanations. Some salient implications emerge.

Number of Pages in PDF File: 43

Keywords: Corruption, Lobbying, Influence, Political Economy

JEL Classification: O57, P16

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Date posted: April 11, 2006  

Suggested Citation

Kaufmann, Daniel and Vicente, Pedro C., Legal Corruption (November 24, 2005). Available at SSRN: http://ssrn.com/abstract=829844 or http://dx.doi.org/10.2139/ssrn.829844

Contact Information

Daniel Kaufmann
The Brookings Institution ( email )
1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6257 (Phone)
HOME PAGE: http://www.thekaufmannpost.net
Pedro C. Vicente (Contact Author)
New University of Lisbon - Nova School of Business and Economics ( email )
Campus de Campolide
Lisbon, 1099-032
Portugal
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