Plata o Plomo?: Bribe and Punishment in a Theory of Political Inuence

We present a model where groups attempt to exert in‡uence on policies using both bribes (plata, Spanish for silver) and the threat of punishment (plomo, Spanish for lead). We then use it to make predictions about the quality of a country’s public o¢ cials and to understand the role of institutions granting politicians with immunity from legal prosecution. The use of punishment lowers the returns from public o¢ ce and reduces the incentives of high ability citizens to enter public life. Cheaper plomo and more resources subject to o¢ cial discretion are associated with more frequent corruption and less able politicians. Moreover, the possibility of punishment changes the nature of the in‡uence game, so that even cheaper plata can lower the ability of public o¢ cials. Protecting o¢ cials from accusations of corruption (immunity) will decrease the frequency of corruption and may increase the quality of politicians if the judiciary is weak. These predictions are the opposite to those emerging from a model where only bribes are used. JEL Classi…cation: D72, D78, K4.