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

Real business cycle theory, REAL BUSINESS CYCLE THEORY: The parable th...

REAL BUSINESS CYCLE THEORY: The parable that motivates this discussion originated with Edmund Phelps and invites you to think that all men (and women) are islands. They have p

.marketing structures, discuss the implications of various market structure...

discuss the implications of various market structures(competitive and non-competitive)for price determination

Mrts., why mrts should convex to origin

why mrts should convex to origin

Economics, Ask questiowhat are the importance of the branches of economics

Ask questiowhat are the importance of the branches of economics

Strategies and policies for administrative reforms, STRATEGIES AND POLICIES...

STRATEGIES AND POLICIES FOR ADMINISTRATIVE REFORMS: As stated in a United Nation's Publication, following strategies and policies are necessary to bring about administrative i

Supply, what happen when a supply shift to the right on a graph

what happen when a supply shift to the right on a graph

Domestic development agenda, Problem : (a) Using examples of Least Deve...

Problem : (a) Using examples of Least Developed Countries, explain the: (i) causes of market failures; and (ii) consequences of market failures (b) Describe the common

Protec tionism and free trade, what is the south africas governments standp...

what is the south africas governments standpoint on international trade

Equilibrium level of economic output, Provide an economic explanation of wh...

Provide an economic explanation of what you have shown in your diagram above.  Iceland was a small open economy with perfect capital mobility. Consequently, the equilibrium domesti

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