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

Excess capacity, the prevalence of excess capacity is the direct consequenc...

the prevalence of excess capacity is the direct consequence of the existence of monopolistic competition

Assigment, What is the theory of second best? Prove the theorem with the he...

What is the theory of second best? Prove the theorem with the help of diagram.

Keynesian cross, explain how the keynesian cross shows that the economy is ...

explain how the keynesian cross shows that the economy is susceptible to self-fulfilling prophesies, either positive or negative

TRENDS and Composition, discuss the trend and composition of national incom...

discuss the trend and composition of national income and per capital income

managerial economics, IS INDIAN COMPANIES RUNNING A RISK BY NOT GIVING ATT...

IS INDIAN COMPANIES RUNNING A RISK BY NOT GIVING ATTENTION TO COST CUTTING?

Linear break even analysis, what do you understand by linear break-even poi...

what do you understand by linear break-even point? in what way is it useful in managerial economics? what are the assumptions underlying the analysis?

buget line, What is buget line how it is calculated

What is buget line how it is calculated?

Oligopoly, Oligopoly and its properties

Oligopoly and its properties

Ccc, #question.ccccc

#question.ccccc

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