Book contents
- Frontmatter
- Contents
- List of boxes
- Acknowledgements
- A roadmap to this book
- 1 Introduction
- 2 Enemies of corruption
- 3 What is bad about bureaucratic corruption? An institutional economic approach
- 4 The dilemma of the kleptocrat: What is bad about political corruption?
- 5 Corruption and transactions costs: The rent-seeking perspective
- 6 Making corrupt deals: contracting in the shadow of the law
- 7 Exporters' ethics and the art of bribery
- 8 How confidence facilitates illegal transactions: An empirical approach
- 9 Corrupt relational contracting
- 10 Concluding thoughts
- Appendix: Technical Details to the Transparency International Corruption Perceptions Index
- References
- Subject index
6 - Making corrupt deals: contracting in the shadow of the law
Published online by Cambridge University Press: 05 November 2009
- Frontmatter
- Contents
- List of boxes
- Acknowledgements
- A roadmap to this book
- 1 Introduction
- 2 Enemies of corruption
- 3 What is bad about bureaucratic corruption? An institutional economic approach
- 4 The dilemma of the kleptocrat: What is bad about political corruption?
- 5 Corruption and transactions costs: The rent-seeking perspective
- 6 Making corrupt deals: contracting in the shadow of the law
- 7 Exporters' ethics and the art of bribery
- 8 How confidence facilitates illegal transactions: An empirical approach
- 9 Corrupt relational contracting
- 10 Concluding thoughts
- Appendix: Technical Details to the Transparency International Corruption Perceptions Index
- References
- Subject index
Summary
Introduction
Hindustan Times, New Delhi, October 1985, Astrological Section, Virgo:
All round improvement but not without strings, which you must be able to recognize and accept … If paying a bribe to anyone, see that the job is done.
How can we make corruption as arduous as possible? How can we increase the transaction costs of corrupt deals? These questions are at the core of this chapter, which will employ new institutional economic thinking for an analysis of the microeconomic determinants of corrupt transactions. In spite of a growing interest in the economics of corruption, the tools of New Institutional Economics have hardly been applied to this topic. Noteworthy early exceptions are Husted (1994), Lambsdorff (1999), Lambsdorff et al. (2004), della Porta and Vanucci (1999), Vanucci (2000), and Rose-Ackerman (1999: 91–110).
This chapter argues that an institutional viewpoint can enrich our understanding of corrupt agreements. Central to the analysis are transaction costs, including the costs of searching for partners, determining contract conditions, and enforcing contract terms. Transaction costs of corrupt agreements differ from those of legal deals, because there is a need for camouflage and because partners in such a deal end up with potentially damaging information about each other. For these reasons, corrupt agreements are more likely to employ middlemen or come about as a by-product of legal exchange and social structures.
- Type
- Chapter
- Information
- The Institutional Economics of Corruption and ReformTheory, Evidence and Policy, pp. 136 - 163Publisher: Cambridge University PressPrint publication year: 2007
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