Bureaucratic competition versus monopoly: measuring corruption and welfare

The paper constructs a framework where both welfare-impact and corruption-impact of the introduction of competition in a monopoly bureaucracy can be derived. Two different measures of corruption i.e. Incidence of Corruption and Corruption Rents have been applied to measure two different types of corruption: extortion and collusion. The paper shows that the conclusion we draw about corruption-impact and welfare-impact of the introduction of competition in a bureaucracy depends on the type of corruption we are looking at and the type of measure we are using. It also shows that with the introduction of competition in a monopoly bureaucracy the corruption measure and the welfare measure of an economy may move in opposite directions. The policy implications of the results are discussed.