Effects on Efficiency - 3

One does not have to take a moralistic
position on corruption to see that
some of these arguments above in favor
of the efficiency effects of corruption
are fraught with general problems, even
though in individual instances some redeeming
features of corruption may be
present. For example, in the secondbest
case made above, it is usually presumed
that a given set of distortions are
mitigated or circumvented by the effects
of corruption; but quite often
these distortions and corruption are
caused or at least preserved or aggravated
by the same common factors. The
distortions are not exogenous to the system
and are instead often part of the
built-in corrupt practices of a patronclient
political system. As we have indicated
above, bidding procedures in such
a system may still end up in allocational
inefficiency.
As for speed money, Gunnar Myrdal
(1968), citing the 1964 Santhanam
Committee on the Prevention of Corruption
appointed by the Government
of India, has argued that corrupt officials
may, instead of speeding up, actually
cause administrative delays in order
to attract more bribes.3 (I am told that
in Russia there is a clear terminological
distinction between mzdoimstvo, taking
a remuneration to do what you are supposed
to do anyway, and likhoimstvo,
taking a remuneration for what you are
not supposed to do.) Lui’s equilibrium
queuing model is meant to question the
validity of Myrdal’s hypothesis at the
theoretical level. But, as Jens C. Andvig
(1991) points out, from the point of
view of imperfect information and strategic
considerations queues as allocation
mechanisms are more complex and
many-sided than has been recognized in
the literature, and different ways of organizing
the queue may give rise to different
outcomes on the average waiting
time. In Lui’s otherwise very interesting
model, for example, both sides in the
corrupt transaction are honest in the
sense that they stick to a deal, that no
new bribe offers are made by the waiting
clients after the new entrants have
arrived, that there is no moral hazard
about the reliability of the sale by
the server of a priority in the queue,
and so on. The model’s results may not
be robust to these kinds of considerations.