Bureaucratic Corruption and Mass Media

Abstract

This paper investigates the relationship between a bureaucracy and mass media industry, and its implications to corruption. We develop a bureaucratic model of corruption with mass media. A representative profit maximizing media firm seeks for corruption news to be printed and sold. Channels through which competition in media industry and press freedom affect equilibrium corruption in a bureaucracy are modeled. Different degrees of media freedom and competition affect production and employment decisions of media firms, and this in turn affects the effectiveness of media in monitoring corruption. Competition and freedom in media sector also have an influence on bureaucratic structure and consequently on equilibrium corruption. We find that the degree of competition in media market plays a significant role in controlling corruption. Freedom of media also reduces corruption. Empirical results support these findings. Media competition appears to be a more important tool to combat corruption than press freedom. The corruption problem in Italy could be reduced to the level experienced by France if the competitiveness of its media industry was to be improved to the same level as that of United Kingdom.

Keywords: Corruption, Bureaucracy, Mass Media

JEL Classification: D73, D8, H26