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

Explain the main problems with government intervention, Question: i) Ex...

Question: i) Explain the main problems with government intervention. ii) Why and how do governments seek to control monopolies? iii) A country should specialise in the pr

Advanced microeconomics, How would you construct an estimate of marginal co...

How would you construct an estimate of marginal cost, & ?C(w, y) , in each period? ?Y

Why a high level of labor force growth is correlated, Why a high level of l...

Why a high level of labor force growth is correlated A high level of labor force growth is correlated--even though less powerfully--with a low level of output per worker. The a

Please help, 1. Suppose the banking system has reserve of $750000, demand d...

1. Suppose the banking system has reserve of $750000, demand deposits of $2500000 and a reserve requirement of 20%. a. if the fed now purchases $125,000 worth of govt bonds from t

Disposable income, what is disposable income and its importance.

what is disposable income and its importance.

Mirginal utility, what is the basis of marginal utility

what is the basis of marginal utility

Subject matter of economics, Ask factor affects elasticity of demandquestio...

Ask factor affects elasticity of demandquestion #Minimum 100 words accepted#

Total Product, Why total product continues to increase despite a decrease i...

Why total product continues to increase despite a decrease in the marginal product?

Economic Growth, the prevention of major swings in economic activity cn be ...

the prevention of major swings in economic activity cn be handled most easily by the financial or government sector?

Economic Question , 4) The prevention of major swings in economic activity ...

4) The prevention of major swings in economic activity can be handled most easily by the A. household sector B. business sector C. financial sector

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