New Economics Papers
on Law and Economics
Issue of 2013‒04‒20
three papers chosen by
Jeong-Joon Lee, Towson University

  1. Legalization of Bribe Giving when Bribe Type is Endogenous By Mandar Oak
  2. Inequality and Crime Rates in China By Tsun Se Cheong; Yanrui Wu
  3. Cheap talk about the detection probability By Baumann, Florian; Friehe, Tim

  1. By: Mandar Oak (School of Economics, University of Adelaide, SA 5005)
    Abstract: In a provocative paper, Basu (2011) argues that for a class of bribes, called harassment bribes, legalization of bribe giving will reduce bribery. We examine the applicability of Basu's insight in a realistically complex environment in which the type of the bribe---harassment or non-harassment---is endogenously determined, and it is not feasible to legalize the giving of non-harassment bribes. We find that in such environment Basu's proposal, in and of itself, yields mixed results: in some cases it can reduce even the prevalence of non-harassment bribes and improve social welfare. However, in other cases it will be counter-productive, i.e., it can reduce social welfare while failing to eliminate bribery. Our analysis points to additional policies aimed at strengthening the legal institutions which, in conjunction with Basu's proposal, will help reduce bribery.
    Keywords: Corruption, Bribery, Harassment Bribes, Non-Harassment Bribes
    JEL: D73 K42
    Date: 2013–04
  2. By: Tsun Se Cheong (Business School, University of Western Australia); Yanrui Wu (Business School, University of Western Australia)
    Abstract: This paper examines the impact of intra-provincial regional inequality on crime rates in China. The results show that intra-provincial regional inequality is positively correlated with the crime rate in the regions. However, education is found to be negatively correlated with the crime rate. In addition, it is also observed in this study that regional crime rates are positively linked with the level of inflation, unemployment rate, and inequalities in consumption and employment between the rural and urban sectors.
    Date: 2013
  3. By: Baumann, Florian; Friehe, Tim
    Abstract: This paper analyzes whether the behavior of potential offenders can be guided by information on the actual detection probability transmitted by the policy maker. It is established that, when viewed as a cheap-talk game, the existence of equilibria with information transmission depends on the level of the sanction, the level of costs related to imposing the sanction, and the level of social harm resulting from the offense. In addition, we find that the policy maker (i.e., society as a whole) is not necessarily better off ex ante when more information is transmitted in equilibrium, but that potential offenders always are. --
    Keywords: crime,cheap talk,law enforcement,imperfect information
    JEL: K42 H23 C72
    Date: 2013

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