Corruption as a Problem of Parallel Redistribution System

Modern and Current Trends in the Public Sector Research Proceedings of the International Conference organised by the Department of Public Economics, Brno: Masaryk University, 2012

9 Pages Posted: 29 Nov 2011 Last revised: 12 Oct 2012

See all articles by Tomáš Otáhal

Tomáš Otáhal

Mendel University - Faculty of Economics and Business Administration

Petr Wawrosz

The University of Finance and Administration

Date Written: November 28, 2011

Abstract

We present a model of parallel redistribution system to explain the problem of corruption. Within this model we synthesize both agency theory and rent-seeking. More precisely, we argue that the principal-agent theory has problems accounting for the environment in which the agents offering and accepting corruption operate as well as explaining the importance of the agents for the survival of their environment. The rent-seeking theory, on the other hand, finds it difficult to establish socially effective legislation and ways to determine the barriers to entry that motivate agents to behave corruptly. Both problems, however, are central to solving the problem of corruption. Lacking the knowledge of the agent’s environment (system) and their significance for the survival of the system, the theory cannot define incentives that would discourage the agent from corrupt behavior. If the rent-seeking theory does not determine the barriers to entry that motivate agents to behave corruptly, it cannot determine the proper legislation that would deter corrupt behavior and lead to general prosperity. Both problems can be explained and solved within theory of redistribution systems and its part theory of parallel redistribution games.

Keywords: Corruption, redistribution system, parallel redistribution game, game theory

JEL Classification: C72, D73, D82

Suggested Citation

Otáhal, Tomáš and Wawrosz, Petr, Corruption as a Problem of Parallel Redistribution System (November 28, 2011). Modern and Current Trends in the Public Sector Research Proceedings of the International Conference organised by the Department of Public Economics, Brno: Masaryk University, 2012 , Available at SSRN: https://ssrn.com/abstract=1965647 or http://dx.doi.org/10.2139/ssrn.1965647

Tomáš Otáhal (Contact Author)

Mendel University - Faculty of Economics and Business Administration ( email )

Staňkova 578/16b
Brno, 602 00
Czech Republic

Petr Wawrosz

The University of Finance and Administration ( email )

Prague
Czech Republic
+420 210 088 819 (Phone)
+420 271 740 871 (Fax)

HOME PAGE: http://www.vsfs.cz/eng/

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