Corruption, Extortion, and the Boundaries of the Law

Svetlana Andrianova () and Nicolas Melissas

No 605, Working Papers from Centro de Investigacion Economica, ITAM

Abstract: We consider a set-up in which a principal must decide whether or not to legalise a socially undesirable activity. The law is enforced by a monitor who may be bribed to conceal evidence of the offence and who may also engage in extortionary practices. The principal only declares the activity illegal if the activity if "very harmful" and if the private benefit (received by the agent if she breaks the law) is "high". We present comparative static results and highlight policy implications.

Keywords: Moral Hazard; Collusion; Non-contractive Output; Rewards and Punishments (search for similar items in EconPapers)
JEL-codes: D82 K4 L22 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2006-09
New Economics Papers: this item is included in nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://ftp.itam.mx/pub/academico/inves/melissas/06-05.pdf First version, 1996 (application/pdf)

Related works:
Journal Article: Corruption, Extortion, and the Boundaries of the Law (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cie:wpaper:0605

Access Statistics for this paper

More papers in Working Papers from Centro de Investigacion Economica, ITAM Contact information at EDIRC.
Bibliographic data for series maintained by Diego Dominguez ().