Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146900
Authors: 
Chiappinelli, Olga
Year of Publication: 
2016
Series/Report no.: 
DIW Discussion Papers 1607
Abstract: 
This paper presents a novel theory of corruption in public procurement. It considers an agency setting of contract execution where the principal is a politician who can commit to a contract auditing policy. It is found that a benevolent politician, by choosing a sufficiently strict auditing, deters the contracting firm from padding costs, conversely, a selfish politician chooses a relatively lax auditing in order to create an incentive for cost-padding, and engages in corruption with the firm in case of detection. If the cost of auditing is high enough, even a benevolent politician might prefer to allow cost-padding.
Subjects: 
Corruption in procurement
Cost-padding
Selfish politician
Endogenous auditing
Procurement contracts
Principal-agent model
JEL: 
D73
D82
L51
Document Type: 
Working Paper

Files in This Item:
File
Size
586.94 kB





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