What is the Contribution of the Theory of Redistribution Systems to the Theory of Corruption?

Review of Economic Perspectives, Vol. 13, No. 2, pp. 92-107, 2013

16 Pages Posted: 22 Aug 2012 Last revised: 28 Jun 2013

See all articles by Tomáš Otáhal

Tomáš Otáhal

Mendel University - Faculty of Economics and Business Administration

Petr Wawrosz

The University of Finance and Administration

Milan Palát

Mendel University

Multiple version iconThere are 3 versions of this paper

Date Written: August 20, 2012

Abstract

Scholars making economic policy recommendations to resolve corruption problem use several approaches, the most dominant of which are the principal-agent and rent-seeking theories. In this paper, 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 vital for 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 acting in a corrupted way. 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 economic development. For these reasons we investigate if both problems can be explained and solved within the alternative theory of redistribution systems and its part – the theory of parallel redistribution games.

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

JEL Classification: D72, D74, D82, C71

Suggested Citation

Otáhal, Tomáš and Wawrosz, Petr and Palát, Milan, What is the Contribution of the Theory of Redistribution Systems to the Theory of Corruption? (August 20, 2012). Review of Economic Perspectives, Vol. 13, No. 2, pp. 92-107, 2013, Available at SSRN: https://ssrn.com/abstract=2133876

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/

Milan Palát

Mendel University ( email )

Zemedelska 1
Brno, South Moravia 61200
Czech Republic

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