Effects on Efficiency - 2

This argument, however, is more
complex when a briber does not have
full information about the cost levels
and therefore the bribing capacity of his
competitors, and when he has to take
into account strategic considerations in
making any particular offer of a bribe.
But the situation can be modeled as an
n-person symmetric game with incomplete
information on the part of each
player and one can draw upon the theory
of sealed-bid auctions. In such a
context Paul J. Beck and Michael W.
Maher (1986) and Donald H. D. Lien
(1986) have shown that under the assumptions
of the model, the lowest-cost
firm is always the winner of the contract,
and thus bribery can reproduce
the efficiency consequences of competitive
bidding procedures under imperfect
information. Inefficiency may, of
course, result if the official is influenced
by considerations other than just
the size of the bribe (for example, favoritism
for a particular client or nepotism);
or when the briber can get away
with supplying a low-quality good at a
high-quality price, and the official lets
in unqualified applicants with a high
willingness to pay; or when bribery is
used to limit the competition (as in the

case of bribing the police or tax inspectors
to harass rival firms).2
Another efficiency argument in favor
of corruption is to look upon it as
“speed money” (for which there are distinct
terms in different countries, like
lagay in the Philippines), which reduces
delay in moving files in administrative
offices and in getting ahead in slowmoving
queues for public services.
Queuing models which have received
some attention in the theoretical literature
allow the possibility for the corrupt
bureaucrat to practice price discrimination
among clients with different time
preference. In an interesting equilibrium
queuing model with some special
assumptions Francis T. Lui (1985) derives
bribing functions where the size of
the bribe (decided by the briber, not
the server of the queue) is linked to the
opportunity costs of time for the individual
client and shows that the bribing
strategies will form a Nash equilibrium
of this noncooperative game that will
minimize the waiting costs associated
with the queue, thereby reducing the
inefficiency in public administration.
(The model can also be useful in designing
schedules of incentive payments
in the pay structure of civil servants.)