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- Title
PROPERTY RIGHTS, CORRUPTION AND THE ALLOCATION OF TALENT: A GENERAL EQUILIBRIUM APPROACH.
- Authors
Acemoglu, Daron; Verdier, Thierry
- Abstract
We consider an economy where contracts are necessary to encourage investments. Contract enforcement requires that a fraction of the agents work in the public sector and do not accept bribes. We find that: (1) It may be optimal to allow some corruption and not enforce property rights fully. (2) Less developed economics may choose lower levels of property right enforcement and more corruption. (3) There may exist a ‘free-lunch’ such that over a certain range it is possible simultaneously to reduce corruption, increase investment, and achieve a better allocation of talent.
- Subjects
INVESTMENTS; CONTRACTS; PUBLIC sector; ECONOMIC structure; PROPERTY rights; INVESTMENT policy; INVESTMENT analysis; FOREIGN investments; POLITICAL corruption
- Publication
Economic Journal, 1998, Vol 108, Issue 450, p1381
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1111/1468-0297.00347