Hierarchies, incentives and collusion in a model of enforcement

TY - JOUR

T1 - Hierarchies, incentives and collusion in a model of enforcement

AU - Mishra, Ajit

PY - 2002/2

Y1 - 2002/2

N2 - This paper considers a model of enforcement with corruptible supervisor in an agency framework. We examine how the supervisor’s choice of effort and honesty would be influenced by various incentive schemes (penalty and reward) and the organizational structure. We consider both vertical hierarchies (corrupt supervisor monitoring another) and horizontal structures where several supervisors monitor the agent and compete for the reward or the bribe income. The latter structure tend to induce less corruption but need not welfare dominate the vertical hierarchies. The organizational structure matters most when there are constraints on rewards and penalties.

AB - This paper considers a model of enforcement with corruptible supervisor in an agency framework. We examine how the supervisor’s choice of effort and honesty would be influenced by various incentive schemes (penalty and reward) and the organizational structure. We consider both vertical hierarchies (corrupt supervisor monitoring another) and horizontal structures where several supervisors monitor the agent and compete for the reward or the bribe income. The latter structure tend to induce less corruption but need not welfare dominate the vertical hierarchies. The organizational structure matters most when there are constraints on rewards and penalties.

KW - Corruption

KW - Hierarchies

KW - Monitoring

KW - Competition

U2 - 10.1016/S0167-2681(01)00201-3

DO - 10.1016/S0167-2681(01)00201-3

M3 - Article

SN - 0167-2681

VL - 47

SP - 165

EP - 178

JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

IS - 2

ER -