GDL

This paper provides an analysis of the corruption problem in public organizations. It


distinguishes between two types of corruption (individual/organized) and crime (bribe


for a legal/illegal application), and between two occasions (before/after detection) for


partial and full collusion. The integrated supervision procedure, where monitoring and


review are centralized, displays higher individual corruption but a lower risk of orga-


nized corruption than the alternative, separated supervision procedure. Higher penal-


ties and bribes, and lower rewards to supervisors, increase the risk of all types of


collusion under both procedures. A trade-off is involved in the choice of the supervision


procedure and penalties: Reducing individual corruption brings about a higher risk of


organized corruption. 1998 by Elsevier Science Inc.

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