Model of corruption with theft, Microeconomics

Consider the model of corruption explored by Shleifer and Vishni's where there is one government-produced good X. There is a demand for that good described by the inverse demand equation Qd = 10 - 2P. The official government price for the good is Pg=3. The government pays the cost of producing the good. A bureaucrat can restrict the supply of X. The fact that there are no risks of detection gives this public official incentives to ask for a bribe to supply the good. Consider the model of "no theft" where the consumer pays the official government price plus a bribe in order to obtain X. Assume that the official marginal revenue for selling the good in this context is given by Qc=8-P.

a) In the model of "no theft" what is the amount of the bribe that the corrupt official will charge?

b) In the same model of corruption with no theft, what is the total cost that the consumer will have to pay in order to obtain the good X?

c) Now consider the "model with theft" where consumers only pay a bribe but not the official government price. In this context, what is the total amount they will pay the corrupt official in order to obtain good X?

Posted Date: 2/23/2013 8:19:51 AM | Location : United States







Related Discussions:- Model of corruption with theft, Assignment Help, Ask Question on Model of corruption with theft, Get Answer, Expert's Help, Model of corruption with theft Discussions

Write discussion on Model of corruption with theft
Your posts are moderated
Related Questions
the prevalence of excess capacity is the direct consequence of the existence of monopolistic competition

draw the demand curve,when there is rise in the price of a product on the demand of the product

Suppose that demand is downward sloping and supply upward sloping. Subsidies cause dead weight loss despite the fact that: 1)consumer surplus increases. 2)total surplus increases

1. Ayanna grows herbs. Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker. This year she doubled her land to 500 square feet, doubl

stackelberg,bertnart,cournet about oligopoly

What is main difference between capital intensive goods and primary products?  Primary product means the major product in which the firm is dealing. Capital intensive good mea

Deficiency of iodine Inadequate iodine also leads to dry skin, loss of hair, exhaustion and sluggish reflexes. For the developing fetus, infant and young children, iodine deficienc

Problem: i) What is meant by ‘own' price elasticity of demand? What factors are likely to affect the size of this elasticity? ii) A publicly owned bus line is running at

Problem: a) What factors would you consider when analysing the digital economy relative to e business? b) "The growing use of the internet by consumers and businesses has re

Q. Strength of the multiplier in microeconomics? Multiplier: An initial stimulus to spending (in form of new consumer, business or government purchases) generally results in a