Corruption and development

Corruption is studied as a form of decision-taking under uncertainty and separate reaction functions are derived for the briber and bribee that shed light on the determination of the bribe. A typology of corruption is established drawing the distinction between extortionary, subversive and benign corruption and their effects on allocative efficiency are explored. It is argued that while the economic effects of corruption are likely to be unfavourable there may be circumstances where the converse holds. The discussion does not extend to the moral and social aspects of corruption.