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 economies 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.
Keywords
Property rightsLanguage changeProperty (philosophy)General equilibrium theoryLaw and economicsVolume (thermodynamics)EconomicsPolitical scienceSociologyLawMicroeconomicsPhilosophyEpistemology
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Publication Info
- Year
- 1998
- Type
- article
- Volume
- 108
- Issue
- 450
- Pages
- 1381-1403
- Citations
- 610
- Access
- Closed
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Cite This
Daron Acemoğlu,
Thierry Verdier
(1998).
Property Rights, Corruption and the Allocation of Talent: a General Equilibrium Approach.
The Economic Journal
, 108
(450)
, 1381-1403.
https://doi.org/10.1111/1468-0297.00347
Identifiers
- DOI
- 10.1111/1468-0297.00347