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Leniency, Asymmetric Punishment and Corruption: Evidence from China

27 Pages Posted: 20 Jan 2016 Last revised: 18 Jan 2018

Maria Berlin

SITE

Bei Qin

The University of Hong Kong

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Date Written: January 17, 2018

Abstract

Fostering whistleblowing through leniency and asymmetric sanctions is regarded as a potentially powerful anti-corruption strategy in the light of its success in busting cartels. The US Department of Justice started a pilot program of this kind in 2016. It has been argued, however, that introduced in China in 1997, these policies did not help against corruption. We map the evolution of the Chinese anti-corruption legislation and aggregate enforcement data, documenting a large and stable fall in prosecuted cases after the 1997 reform. The fall is consistent with reduced corruption detection, but under specific assumptions also with improved deterrence. To resolve the ambiguity, we collect and analyze a random sample of case files from corruption trials. Results point indeed at a negative effect of the 1997 reform on corruption detection and deterrence, but plausibly linked to its poor design: contrary to what theory prescribes, it increased leniency also for bribe-taking bureaucrats that cooperate after being denounced, enhancing their ability to retaliate against whistleblowing bribe-givers.

Keywords: corruption, China, asymmetric punishment, leniency

JEL Classification: K14, N45

Suggested Citation

Berlin, Maria and Qin, Bei and Spagnolo, Giancarlo, Leniency, Asymmetric Punishment and Corruption: Evidence from China (January 17, 2018). Available at SSRN: https://ssrn.com/abstract=2718181 or http://dx.doi.org/10.2139/ssrn.2718181

Maria Berlin (Contact Author)

SITE ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

HOME PAGE: http://https://www.hhs.se/sv/personsida/?PersonID=25531033

Bei Qin

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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