Uncoordinated Corruption as an Equilibrium Phenomenon

Independent rent extraction by competing public officials produces a level of bribery that is too high both from the viewpoint of corrupt administrations and from the viewpoint of social welfare. Nevertheless, governments in many developing countries do not curb the harmful lack of coordination between complementary agencies. This paper explains this phenomenon by arguing that competition from organized crime and limited control of the bureaucratic apparatus make it optimal for rapacious governments not to coordinate the bureaucracy.