This paper examines the role of popular participation, in particular through NGOs, in both promoting democracy (seen as essential for better governance) and the maintenance of a market economy. Making a crucial distinction between the forms and characteristics of good government, it finds no empirical relationship between the form of government and successful development. It argues that while d...

The main questions which the literature on rule production by agencies and bureaucracies deals with are: To what extent should legislators delegate rule making to bureaucracy? How can procedural rules curb an agency’s discretion in making substantive rules? Do legislators select bureaucratic decisions for oversight randomly or on the basis of complaints? Who exactly controls bureaucracy: some a...

We posit that autocrats introduce local elections when their bureaucratic capacity is low. Local exploit citizens’ informational advantage in keeping officials accountable, but they also weaken vertical control. As increases, the autocrat limits role of elected bodies to regain argue these insights can explain introduction village rural China and subsequent erosion autonomy years later. constru...

There is a heated debate on the merits of legalizing certain illegal, harmful and corrupting activities (such as trade in illicit drugs), but little theoretical insights on the consequences for optimal enforcement policies and corruption. We propose a model where the government hires law enforcers to report those who engage in a harmful activity. Offenders are allowed to respond by offering bri...

This paper examines the issue of tax evasion by enterprises through underreporting activity. We develop a view of this phenomenon as an equilibrium of the game between a businessman and an imperfectly monitored supervising official, in which a businessman can hide part of his profit and offer bribe to official. We determine conditions under which such tax evasion and bribery become wide-spread ...

This paper studies the consequences of introducing competition between bureaucrats. Bureaucrats are supposed to grant licences to firms that satisfy certain requirements. Firms have to invest into satisfying these requirements. Some bureaucrats are corrupt, that is, they give the licence to any firm in exchange for a bribe. Some firms prefer to buy the licence rather than to invest and satisfy ...

The combination of a general greening of international political debate, and the events of 1992 at the Rio Earth summit have led to great interest in the question of global environmental protection. While it is recognized that international environmental agreements (IEAs) are the means by which the earth's fragile environment is most likely to be protected, this recognition has been recent. Hen...

This paper studies the optimal design of delegation rule in a three-tier principalintermediary-agent hierarchy. In this hierarchy, monetary transfer is not feasible, delegation is made sequentially, and all players are strategic. We characterize the optimal delegation mechanism. It is shown that the singleinterval delegation a la Holmstrom is optimal only when the intermediary is moderately bia...

The aim of this paper is to study the relationship between the shadow economy and corruption as determinants of public debt in the Spanish Autonomous Communities. In addition, we construct a Corruption Perception Index for those regions. Our data constitute panel data for the period 2000–2012. The results show that the volume of the shadow economy has a significant and positive impact on region...

A model of “harassment bribes,” paid for services one is entitled to, is developed to analyze the proposal to legalize paying these bribes while increasing fines on accepting them. We explore performance as regards corruption deterrence and public service provision. Costs of verifying reports make the scheme more effective against larger bribes and where institutions’ quality is higher. A modif...