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Corruption, property rights and the allocation of talent: a general equilibrium approach

Corruption, property rights and the allocation of talent: a general equilibrium approach
Corruption, property rights and the allocation of talent: a general equilibrium approach
We consider an economy where contracts are necessary to encourage investments. Contract enforcement requires that a fraction of the agents work in the public sector and do not accept bribes. We find that: (1) It may be optimal to allow some corruption and not enforce property rights fully. (2) Less developed economies may choose lower levels of property right enforcement and more corruption. (3) There may exist a 'free-lunch' such that over a certain range it is possible simultaneously to reduce corruption, increase investment, and achieve a better allocation of talent.
0013-0133
1381-1403
Acemoglu, Daron
65f934f6-a9af-44ad-bbbb-cd8308891ab5
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454
Acemoglu, Daron
65f934f6-a9af-44ad-bbbb-cd8308891ab5
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454

Acemoglu, Daron and Verdier, Thierry (1998) Corruption, property rights and the allocation of talent: a general equilibrium approach. Economic Journal, 108 (450), 1381-1403. (doi:10.1111/1468-0297.00347).

Record type: Article

Abstract

We consider an economy where contracts are necessary to encourage investments. Contract enforcement requires that a fraction of the agents work in the public sector and do not accept bribes. We find that: (1) It may be optimal to allow some corruption and not enforce property rights fully. (2) Less developed economies may choose lower levels of property right enforcement and more corruption. (3) There may exist a 'free-lunch' such that over a certain range it is possible simultaneously to reduce corruption, increase investment, and achieve a better allocation of talent.

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Published date: 1998
Organisations: Economics

Identifiers

Local EPrints ID: 33459
URI: http://eprints.soton.ac.uk/id/eprint/33459
DOI: doi:10.1111/1468-0297.00347
ISSN: 0013-0133
PURE UUID: ff2919aa-c99d-4700-a112-1fbf5770045b

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Date deposited: 22 Dec 2006
Last modified: 27 Apr 2022 05:21

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Contributors

Author: Daron Acemoglu
Author: Thierry Verdier

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