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Bureaucratic Monopoly and the Nature and Timing of Bribes: Evidence from Croatian Data

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Abstract

This paper draws on unique insights about the nature of bribe payments to determine the factors driving composition of bribes (whether cash or non-cash) and their timing (whether prepayment or payment at the time of ‘service’). Key questions addressed are: (i) What is the effect of bureaucratic monopoly on cash bribes? and (ii) How does the monopoly power of bureaucrats influence the timing of bribes? Controlling for many ‘standard’ influences driving corruption and comparing the quality and quantity of government, results show that whereas a monopolist bureaucrat is more likely to demand bribes in cash, he/she is less likely to demand their prepayment. Further, while a larger government makes both cash bribes and prepayment more likely, greater economic prosperity makes cash bribes less likely and does not affect their timing.

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Notes

  1. The project was carried by UNODC and funded by the European Commission CARDS Regional Action Programme 2006, with The Institute of Economics, Zagreb as a Croatian national implementing partner.

  2. Note that while a detailed theoretical model is beyond the scope of present research, the theoretical framework provided seems sufficient for our purposes. An extension might involve the government's utility to be dependent upon the number of bureaucracies as well.

  3. Some other factors like regional press freedom or regional economic liberalization might also affect bribes (Baksi et al., 2009; Goel and Nelson, 2011). However, we could not account for them because of a lack of corresponding data and because the variations across regions in a small country like Croatia are likely to be small.

  4. Our empirical approach is somewhat limited by the nature of the data in the survey, which was conducted more generally and not for the purpose of this study.

  5. Absent the availability of detailed information on the bureaucratic market structure, our use of a dummy variable to denote bureaucratic monopoly is unable to capture qualitative aspects.

  6. Whereas the focus of this paper is on the influence of bureaucratic monopoly in corruption, another interesting angle to study would be to see whether the professions of the bribe payers made a difference (see Mokhtari and Ashtari (2012) for an example involving informal payments in healthcare systems). Such information, unfortunately, was not available.

  7. Both LOGIT and PROBIT estimation techniques generally yield quite similar results.

  8. Due to understandable reluctance of survey respondents to revealing the exact size of bribe payments, we only had this information in a discontinuous manner (ie, within broad ranges).

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Acknowledgements

The authors would like to thank a referee for comments, and UNODC for the use of data. They retain sole responsibility for errors and views expressed.

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Authors and Affiliations

  1. Department of Economics, Illinois State University, 4200 Economics, Normal, 61790-4200, IL, USA

    Rajeev K Goel

  2. Institute of Economics, Trg J.F. Kennedy 7, 10000, Zagreb, Croatia

    Jelena Budak & Edo Rajh

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  1. Rajeev K Goel
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  2. Jelena Budak
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  3. Edo Rajh
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Goel, R., Budak, J. & Rajh, E. Bureaucratic Monopoly and the Nature and Timing of Bribes: Evidence from Croatian Data. Comp Econ Stud 55, 43–58 (2013). https://doi.org/10.1057/ces.2012.36

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