Model of corruption with theft, Microeconomics

Assignment Help:

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?


Related Discussions:- Model of corruption with theft

Time serie, uses of time series in indian economy

uses of time series in indian economy

What simplifying assumption does macroeconomic model make, What simplifying...

What simplifying assumptions does the traditional macroeconomic model make (in addition to those made in the NIPA)?  The simplifying assumptions are:  1) The household and i

Explain about neoliberalism, Q. Explain about Neoliberalism? Neoliberal...

Q. Explain about Neoliberalism? Neoliberalism: A modern, harsher incarnation of capitalism that became dominant globally beginning in early 1980s, largely as a reaction to inte

Markets, What are markets types of markets

What are markets types of markets

Why do demand curves generally slope downward, Why do demand curves general...

Why do demand curves generally slope downward?  The demand curve slopes downward because in general, the higher the price of the good, the fewer people will need to buy it.

Cost, Relatiön between TC ,TFC and TVC

Relatiön between TC ,TFC and TVC

Natural research, Biochemistry is regarded a dull topic. Not many learners ...

Biochemistry is regarded a dull topic. Not many learners like to research it in school since it includes a thorough comprehension of issue and clinical changes in the framework, fr

Monopsony, disadvantages of monopsony

disadvantages of monopsony

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd