Berkeley Program in Law and Economics

In this paper the analytical framework outlined by James Buchanan and Yong J. Yoon (2000) to explore the symmetric tragedies of the commons and the anti-commons is generalized to deal with the study of the relationship between institutions and corruption. A simple game theory model is built to show that corruption produces a tragedy of the anti-commons and that it can be discouraged by the introduction of competition among corrupt agents to turn it into a tragedy of the commons. It is also shown that coordinated corruption or mafia behaviour produces a better allocation of resources than uncoordinated coruption and that punishment of corruption based on earnings collected from bribes produces a better allocation of resources than sanctions based on the number of corrupt acts committed.