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Incentives & Elimination of Price Controls in Corruption

Incentives & Elimination of Price Controls in Corruption


Just as rewards are often granted for individuals who return a lost item, or turn in a criminal, it is important to promote incentives through rewards and protection for people who report corruption, or whistleblowers, since they can be an invaluable source of information about where corruption and institutional inefficiency.

  • The public interest-institutionalist perspective also promotes incentives for ethical behaviour but puts the onus on the institution rather than on the whistleblower.
  • This theory explains that institutions shape individual officials rather than the general population, and that financial advancement is as much an incentive for corruption as non-financial benefits.
  • The frequency and scope of corruption by- individual officials is limited by the norms, structure, and capacity of the institution in which they work. Therefore, people act corruptly because their institution allows it.

  Elimination of Price Controls

Price controls are a form of government intervention in the economy in which a government agency regulates the prices that would have otherwise fluctuated with consumer needs.

  • The government agency may attempt to enforce the exact prices at which a particular good or service could be sold, or set “ceiling prices”, which set a maximum price that may be charged but do not prohibit transactions at lower prices or “floor prices”, which set a minimum price that may legally be charged but do not prohibit transactions at higher prices for particular goods or services.

Price controls involve a distinction between those involving theft and those without.

Price controls are dangerous when officials turn over the actual price of the good to the government, sell a license for a government price plus a bribe and, the official keeps the bribe.

In the case of corruption with theft, the official keeps all the money and does not give any to the government.

For example, customs officials let goods through for less than official duty but do not pass the money on to the government.                        Incentives & Elimination of Price Controls in Corruption