The “tragedies of the commons and the anti-commons” framework is used to study institutions and corruption. It is shown that corruption produces a “tragedy of the anti-commons” and that it can be discouraged introducing competition among corrupt agents. It is also shown how coordinated corruption and punishment based on earnings collected from bribes produces a better allocation of resources than uncoordinated corruption and punishment based on the number of corrupt acts committed.

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This paper presents a model of the interaction between corrupt government officials and industrial firms to show that corruption is antithetical to competition. As corrupt agents are subject to detection, it is further shown that increased democratization can both decrease corruption and increase competition. Empirical evidence is presented that supports the predicitons of the model.

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This paper explores the interaction of three institutions that provide checks and balances to corruption: the electoral system, media and judiciary. The theoretical model shows that when the judiciary and media are more dependent and the elections less competitive, corruption flourishes. Furthermore, strengthening one institution increases the marginal effectiveness of the others in the control of corruption. The results of the empirical analysis are consistent with the predictions of the model.

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We investigate the relationship between corruption and policy stability, with a model driven by two effects: The horizon effect, according to which more instability leads the incumbent to be more corrupt due to short horizons; and the demand effect, by which the private sector is more willing to bribe more stable incumbents. The former effect dominates for low values of stability, but the latter effect prevails in highly stable regimes. This U-shaped pattern is confirmed by the evidence.

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We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the consequences of the client’s decision. We test this framework using a unique data set on bribery of Peruvian public officials by individuals. We find that both bribery incidence and value are increasing in household income. However, Service improvements in response to a bribe merely offset service reductions associated with angling for a bribe.

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This paper documents a striking relationship: crime appears to induce savings. While the crime literature has focused the determinants of crime, we study the reverse question: how does crime affect economic decisions? This question is interesting and important for key economic variables can be influenced by crime. Using Brazilian city level data, we find that high crime cities also have high savings rates. The results are robust to endogeneity of crime, different measures of savings, and a large set of demographic controls. Furthermore, it only arises when property crime is considered, which is consistent with the theoretical reasons why crime would affect savings positively.

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This paper measures the impact of crime on firm investment by exploiting variation in kidnappings in Colombia from 1996 to 2002. Our central result is that firms invest less when kidnappings target firms. We also find that aggregate crime rates—homicides, guerrilla attacks, and general kidnappings—have no significant effect on investment. This finding alleviates concerns that our main result may be driven by unobserved variables that explain both overall criminal activity and investment. Furthermore, kidnappings that target firms reduce not only the investment of firms that sell in local markets, but also the investment of firms that sell in foreign markets. Thus, an unobservable correlation between poor demand conditions and criminal activity is unlikely to explain the negative impact of firm-related kidnappings on investment. Our results are consistent with the hypothesis that managers are reluctant to invest when their freedom and life are at risk; however, we cannot completely discard alternative explanations.

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