The Review of Austrian Economics

, Volume 16, Issue 4, pp 363-379

First online:

Why is Corruption Tolerated?

  • Enrico ColombattoAffiliated withFacoltà di Economia, Università di Torino and ICER

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It is maintained that a closer analysis of the features of the underlying contract reveals that under many circumstances corruption is in fact a rational and understandable reaction to institutional failures, which are often far from accidental. Sometimes it can even be considered legitimate, when instrumental in achieving goals shared by the vast majority of the electorate.

To this purpose, three different stylized institutional frameworks are analyzed: developed, totalitarian and transition countries. The origin, scope and consequences of corruption vary significantly across the different frameworks. The normative conclusions should therefore be adjusted accordingly.

corruption rent-seeking discretionary power institutions