Corruption and Decentralisation

Dipartimento di Scienze Economiche, Working Paper No. 342/83

40 Pages Posted: 11 Apr 2000

See all articles by Emanuela Carbonara

Emanuela Carbonara

University of Bologna - Department of Economics

Date Written: March 2000

Abstract

This paper studies the impact of decentralisation on corruption in a hierarchy, where decentralisation is intended as the delegation of power to lower levels. More decentralisation has a positive impact on corruption, raising individual propensity to accept bribes. It has also a two-fold effect on incentives to monitor corrupt activities by higher levels. It causes a loss in control, reducing their willingness to monitor. It also increases the bribe paid to lower levels, enhancing their propensity to corruption and raising the higher layers' monitoring. When this second effect dominates, decentralisation, although creating agency problems, can help in controlling corruption.

JEL Classification: D23, D73, D82

Suggested Citation

Carbonara, Emanuela, Corruption and Decentralisation (March 2000). Dipartimento di Scienze Economiche, Working Paper No. 342/83. Available at SSRN: https://ssrn.com/abstract=220528 or http://dx.doi.org/10.2139/ssrn.220528

Emanuela Carbonara (Contact Author)

University of Bologna - Department of Economics ( email )

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Bologna, 40126
Italy
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