Bureaucratic Competition and Corruption: Theory and Experimental Evidence
Description
This paper examines how bureaucratic competition and cadre-evaluation criteria jointly shape corruption in China’s political system. We develop a tournament-style promotion-contest model in which local officials choose two forms of corruption: (i) rent-seeking graft, which depresses economic performance, and (ii) office-buying bribery, which increases promotion prospects through personal ties. The model predicts that stronger competition increases bribery but reduces graft. Placing greater weight on GDP performance discourages graft and can shift incentives toward bribery. In a baseline specification with a reduced-form corruption-budget constraint, sufficiently strong GDP accountability drives graft to zero and, by eliminating the resources that finance office-buying, also eliminates bribery. We test these predictions in a laboratory experiment with four treatments that vary competition intensity and the weight on GDP. The results largely confirm the comparative statics for graft and the disciplining effect of GDP accountability; however, bribery rises unexpectedly when GDP becomes less salient. Overall, the findings show that institutional design affects not only the level of corruption but also its composition.
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Institutions
- Tianjin UniversityTianjin, Tianjin