Legal Corruption

The authors challenge the conventional definition of corruption as the 'Abuse of public office for private gain', making a distinction between legal and illegal forms of corruption, and paying more attention to corporate patterns of corruption (which also affect public corruption). They undertake to identify general determinants of the pattern of legal and illegal corruption worldwide, and present a model where both corruption (modelled explicitly in the context of allocations) and the political equilibrium are endogenous. Three types of equilibrium outcomes are identified as a function of basic parameters, namely initial conditions (assets/productivity), equality, and fundamental political accountability.