Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108065
Authors: 
Maier, Norbert
Year of Publication: 
2004
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2004/13
Abstract: 
In many cases, politicians and government officials are forbidden by law to accept monetary donations from interest groups or other outside parties as these monetary transfers are thought to cause social inefficiencies. The empirical literature supports this view as it finds a negative link between corruption (secret payments to government officials) and growth. However, banning monetary transfers to government officials might be discouraged as it is equivalent to restricting transactions in the market for political decision-making and inefficiencies can arise exactly because of these constraints. In this paper, we address the following question: Under which conditions should the government forbid its officials to accept monetary donations, even though enforcing such bans is costly and secret transfers still may occur? In particular, we analyze a common agency game, in which a government official acts as the common agent of the government and some third party, and identify some conditions under which banning economic interactions between the official and the third party is welfare enhancing. We also explain why secret monetary transfers to government officials can lead to economic inefficiencies.
Subjects: 
Corruption
Bribing
Common Agency
Exclusive Dealing
Hidden Contracting
JEL: 
C72
D62
D73
K42
P16
Document Type: 
Working Paper

Files in This Item:
File
Size
372.74 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.