On the Economic Modeling of Corruption

This work discusses the economic literature on Corruption. I draw the distinction between market- and parochial corruption. The institutions and the corrupt contract are the base of the following analysis. Corruption happens within a Principal-Agent relationship. Corruption may flourish if economic rents exist the costs of corruption are low or if the agents have large discretionary power. I discuss whether corruption always has to have negative influence on economic efficency. The empirical part analysis the influence of certain determinantson the CPI. The main findings are: