Citation

Bac M. Int. Rev. Law Econ. 1998; 18(1): 101-120.

Copyright

(Copyright © 1998, Elsevier Publishing)

DOI

10.1016/S0144-8188(97)00060-4

PMID

unavailable

Abstract

This paper provides an analysis of the corruption problem in public organizations. It distinguishes between two types of corruption (individual/organized) and crime (bribe for a legal/illegal application), and between two occasions (before/after detection) for partial and full collusion. The integrated supervision procedure, where monitoring and review are centralized, displays higher individual corruption but a lower risk of organized corruption than the alternative, separated supervision procedure. Higher penalties and bribes, and lower rewards to supervisors, increase the risk of all types of collusion under both procedures. A trade-off is involved in the choice of the supervision procedure and penalties: Reducing individual corruption brings about a higher risk of organized corruption.