Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics

Human Capital and Financial Management: Proceedings of the XVth International Scientific Conference, Prague: University of Finance and Administration, 2012

14 Pages Posted: 29 Sep 2012 Last revised: 17 Feb 2013

See all articles by Petr Wawrosz

Petr Wawrosz

The University of Finance and Administration

Tomáš Otáhal

Mendel University - Faculty of Economics and Business Administration

Multiple version iconThere are 3 versions of this paper

Date Written: September 25, 2012

Abstract

Can corruption improve economic efficiency? 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. For these reasons we present alternative model of the theory of redistribution systems and its part parallel redistribution games to synthesize both agency theory and rent-seeking and investigate if both problems can be explained and solved. Within our model we present selected quasi-experimental anecdotal evidence from the early period of transition in the Czech and Slovak Republics to support the implication that the corruption undermines economic efficiency.

Keywords: Anecdotic evidence, bureaucracy, corruption, economic efficiency, rent-seeking, redistribution system, rule of law, parallel redistribution game

JEL Classification: D72, D73, K42, C71

Suggested Citation

Wawrosz, Petr and Otáhal, Tomáš, Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics (September 25, 2012). Human Capital and Financial Management: Proceedings of the XVth International Scientific Conference, Prague: University of Finance and Administration, 2012 , Available at SSRN: https://ssrn.com/abstract=2153739 or http://dx.doi.org/10.2139/ssrn.2153739

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/

Tomáš Otáhal (Contact Author)

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

Staňkova 578/16b
Brno, 602 00
Czech Republic

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