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

Long-run supply of housing , The Long-Run Supply of Housing * Scenario...

The Long-Run Supply of Housing * Scenario 1: Owner-occupied housing - Suburban or rural areas - National market for inputs * Questions - Is this an increasing or co

What factors shift the aggregate demand curve to right, What factors shift ...

What factors shift the Aggregate demand curve to right and what factors shift the AD curve to left?  AD shifts to the right when any component of AD enhances autonomously; e.g

Theory, critical of comparative advantage theory

critical of comparative advantage theory

What do you meant by the term economic efficiency, Problem: i) What do ...

Problem: i) What do you meant by the term ‘economic efficiency'? ii) By using appropriate examples differentiate between fixed and variable costs. iii) Consider different

1, a) Consider the following flows (in thousand of people) between the vari...

a) Consider the following flows (in thousand of people) between the various labour market states in a particular month: UE = 240 000; UNLF = 180 000; EU = 190 000; NLFU = 220 000

Nursing, Questions 1. Mrs Holt, 85 years old, has been admitted to acute ca...

Questions 1. Mrs Holt, 85 years old, has been admitted to acute care following a fall resulting in a fractured femur. She is a widow and lives alone with her three cats for compa

Evironmental issues and elasticity, looking for information to complete ess...

looking for information to complete essay, info looking for What is elasticity and its calculations for the price of a lap top, that increases by 20% and there is a 40% drop in qua

Fresnel approximation of a spherical wave, Show that when a plane wave is t...

Show that when a plane wave is transmitted through a thin lens of focal length f in the direction parallel to the optical axis of the lens, its converted into a paraboloid wave (th

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